AluNews - December 2015

China aluminium consumption to peak in 2020, says industry body

Proactive Investors - December 20th, 2015

BEIJING: China's aluminium consumption will peak in 2020 as new industrial uses drive growth, said the vice-president of a Chinese industry association on Sunday, the website of the state-backed China Securities Journal reported.

Aluminium consumption will peak at 44 million tonnes a year, Wen Xianjun, vice-president of the China Nonferrous Metals Industry Association, told a forum, according to the report.

In 2016, aluminium consumption is expected to grow 7.2 percent to 32.8 million tonnes, the report said.

Fuelling the next five years' growth will be new industrial uses, including the manufacture of lighter commercial vehicles, new energy vehicles and airplanes, said Wen.

IronRidge discovers potential new bauxite source in Queensland

Proactive Investors - December 15th, 2015

An initial 48 hole drilling program is underway to define a maiden resource by first quarter 2016.

IronRidge Resources (LON:IRR) has unearthed a high-grade Direct Shipping Ore bauxite deposit at its Monogorilby project in Queensland, Australia.

Bauxite is processed to produce aluminium and IronRidge said its 16 sq km licence had the potential to become a new mineralised province with significant scale potential.

An initial 48 hole drilling program is underway to define a maiden resource by first quarter 2016.

Cuttings so far had indicated an average 5m thick bauxite mineralisation, with highest indications up to 7m.

The location of the deposit also indicated low stripping ratios.

Vincent Mascolo, chief executive, added the resource was also located less than 55km from a dormant rail system connected to the operational port of Bundaberg.

"Mineralisation is of high quality, with favourable gibbsite mineralogy. The material has been found at surface level. Low stripping ratios are implied, and the available alumina to reactive silica ratios are excellent."

"The extent and thickness of DSO bauxite mineralisation discovered is significant. "

IronRidge added that bauxite prices are buoyant currently at US$$60/tonne.

$10 million cut out of Yarwun alumina refinery site

The Observer - December 12th, 2015

RIO Tinto is losing money from Gladstone's alumina refineries and it's the contractors who are being squeezed to turn that around.

Yarwun and Queensland Alumina Limited Contractors and suppliers will be worse off about $10 million through a re-tendering process that will look to make a saving on 750,000 hours (or around 90% of total contract hours).

We understand there have been tens of contractors already laid off, if not more, although nor the company or individual contractors were willing to discuss the details of this.

The company has confirmed a re-tendering process is underway and that they are delaying payments to current contractors; extending their payments from 30 days to 60

This is all only part of a $300 million cost cutting effort across the Rio Tinto aluminium group worldwide announced to the London Metal Exchange this week by chief executive Alf Barrios (pictured).

Speaking to investors, he said Yarwun and QAL were continuing to lose money but they would "aggressively drive costs out of the business".

The price of aluminium is being driven down by an oversupply from China.

But Rio Tinto does estimate prices will increase mid-next year as Chinese production slows down and the country runs out of quality bauxite.

This paper spoke to the manager of a local contract firm who works for both QAL and Yarwun - he didn't want us to name him for fear he would lose his job - who said his employees were nervous but that he understood the need for drastic measures.

"We're happy with the reduction. I'm from Gladstone and if we take the two big players out of the town the impact would be quite severe," the manager said.

"I totally understand that it is out of their control."

He said his staff were nervous about job security but he was more nervous about the town. "I would like to know how many wages they have paid, children they have put through uni and homes they have put up," he said. "They have been great community partners since 1966 and it upsets me when people complain."

Rio Tinto wouldn't go into the expected cuts to contractors at QAL but were positive with the new mine in Weipa that the company would stay in the aluminium business for the long term as long as the refineries were profitable.

Hongqiao to cut down aluminium production capacity

The Star - December 11th, 2015

SHANGHAI: Aluminium producer China Hongqiao Group has shut down 250,000 tonnes of production capacity as Chinese producers look to combat a slump in local prices to record lows.

The output cut, which mirrors similar moves over the past month by the copper, zinc and nickel industries, followed a meeting of 14 major Chinese aluminium smelters in the southwestern city of Kunming in Yunnan province.

"We will not consider resuming production of the (250,000 tonnes) capacity," a China Hongqiao official told Reuters.

China is the world's biggest producer of aluminium, accounting for more than half of the world's 50 million tonnes of capacity. However, Shanghai prices are on course to fall for a sixth straight year, and are down more than20% in 2015.

Traders and analysts said that at least one smelter and local governments were resistant to broader cuts. The smelter was not losing money, while local governments preferred to offer subsidised power because they depend on the sector for economic growth.

The news sent Shanghai aluminium prices higher before closing nearly flat. The most-active February contract on the Shanghai Futures Exchange closed up 0.1% at 10,375 yuan (US$1,612) a tonne, but off a six-week top of 10,600yuan. — Reuters

China aluminium smelters vow to shut capacity, but impact seen limited

Reuters - December 11th, 2015

China's aluminum smelters on Friday pledged to shut more production this month and not to add any new capacity in 2016, as the industry pushes to shore up plunging prices for the metal.

But market participants and analysts were sceptical about the steps, saying they would do little to dent global overcapacity that has ballooned as the world's No.2 economy slows after decades of breakneck growth.

In a statement following a meeting of 14 major producers in Yunnan province on Thursday, China's Nonferrous Metals Industry Association (CNIA) said smelters would shutter another 500,000 tonnes of annual capacity before year-end, bringing the total shut in 2015 to just under 5 million tonnes.

That annual total would equate to about 12 percent of China's 42 million tonnes of capacity, but its impact is likely to be diluted as analysts estimate the country has also added at least 2 million tonnes of new capacity this year. They also said that many of the cuts would have come from shuttering old, inefficient production that would have been closed anyway.

CNIA added that the sector would not start up any new capacity for at least one year or reopen any idled capacity.

"They can (talk about) stopping all the new smelter capacity they like. Nobody is even remotely thinking about building capacity with prices where they are," said analyst Paul Adkins at China-based consultancy AZ China.

Prices for the metal, used in everything from construction to cars, have been languishing at record lows in China and more than six-year lows on the London Metal Exchange.

But traders and analysts said CNIA's steps would not do much to erode a global glut of about 14 million tonnes, which has punished prices, on track for their worst year since 2008.

"On the face of it, it looks substantial. However, I'm sure the market will be a little bit dubious until it sees some real evidence," said strategist Daniel Hynes at ANZ in Sydney.

The steps follow moves over the past month by China's copper, zinc and nickel industries to try and boost prices in the world's top metals producer.

China's state stockpiler was considering buying more than 1 million tonnes of aluminium from local smelters, Reuters reported last month.

Threat to water sources near mines

The Star - December 11th, 2015

I REFER to media reports on the bauxite mining issue which look like the local council's move to restrict the operations to 11 certified contractors has not solved the problems faced by the Kuan­tan folk living near the mines. In fact, it is now threatening a vital aspect of their wellbeing – their drinking water resources!

Bauxite is the main source of aluminium. However, the extraction process produces a large amount of hazardous waste including arsenic, beryllium, cadmium, lead, manganese, chromium, nickel, mercury and naturally-occurring radioactive materials.

Kuantan MP Fuziah Salleh recently highlighted that the Pinang and Mabok rivers, the main source of raw water for the residents, are contaminated by mercury at 14 and 10 times higher than the level allowed respectively. This would definitely affect the water supply in the affected areas.

Moreover, extraction of bauxite ore damages the topsoil so badly the land can never be restored to its original condition. According to historical data from various developed countries, when the red sludge from the mining process is dumped on the ground, its toxic chemicals will percolate underground, reaching the water table and contaminating the main water sources. Therefore, work must be done to reduce the soil runoff especially during therainy season (now). The authorities must look into providing ground cover to control runoff and erosion at the mining sites.

There are a lot of experts, researchers and consultants who could be hired to provide information on how to reduce the impact of mining on health.

Health Risk Assessment reports should have been prepared before the operations began even though bauxite mining is not prescribed in the activity list of the Environmental Quality Act 1974.

Action must be taken to address the concerns of the affected Kuantan folk. Intake point for their water treatment plant must be carefully monitored to assess the level of heavy metals getting into their drinking water.

We understand that bauxite mining is an important industry but there must be safeguards in place to reduce its adverse effects on human health and the environment.

UPDATE 2-China Hongqiao Group cuts aluminium output as prices tumble

Reuters - December 10th, 2015

Dec 10 Aluminium producer China Hongqiao Group said on Thursday it will cut annual capacity by 250,000 tonnes immediately, the latest smelter to pledge to curb supplies as the loss making industry combats record low local prices.

The output cut, representing 6 percent of the company's total capacity, mirrors similar moves over the past month by the copper, zinc and nickel industries and followed a meeting of 14 major Chinese aluminium smelters in thesouthwestern city of Kunming in Yunnan province.

"We will not consider resuming production of the (250,000 tonnes) capacity," a China Hongqiao official told Reuters.

Aluminium futures in Shanghai closed slightly higher on the news, although the reaction was largely muted as the latest cut in the world's top producing country was considered too small to make a dent in a global stockpile glut estimated at 14 million tonnes.

Still, the move reflects the deepening pain across the industry with Shanghai prices down more than 20 percent in 2015 and on course to fall for a sixth straight year.

Wan Ling, an analyst at research consultancy CRU, said there is likely to be "more production cuts at plants with high cost and big losses, especially those using grid power."

"The reduction will be supportive to prices but difficult to say it is enough to push up prices."

China Hongqiao is not the first major Chinese smelter to reduce output this year. Chalco and SPIC have already made cutbacks. According to CRU data, China has closed 3.65 million tonnes per year of primary aluminium smeltingcapacity.

Alba's $3.5 bn potline construction on track

Bahrain News Agency - December 9th, 2015

Construction of Aluminium Bahrain's $3.5 billion sixth potline is set to begin next year with metal production expected by January 2019, Chief Executive Tim Murray said.

Murray said the project will boost the smelter's annual output by 514,000 tonnes to 1.45 million tonnes a year.

It will also make Alba the largest single-site aluminium smelter in the world, he added.

"One of the biggest industrial projects in Bahrain, the line 6 expansion project is expected to have a big impact on the economy and new job creation," he said.

"It is estimated that 500 new jobs will be created in Alba and an additional 2,000-3,000 jobs in the downstream aluminium industry will also result from the expansion. Also, at least 50pc of the new metal production is expected to be sold to existing and new Bahrain downstream customers," said Murray.

Actual construction of line 6 will commence upon the completion of final engineering designs, selection of engineering, procurement, construction and management contractor for it and engineering, procurement and constructioncontractor for Alba's fifth power station with a capacity of 1,350 megawatts.

The potline itself will cost $2.5bn and the power station is set to cost $1bn.

The new potline will have 404 pots utilising Dubai's state-of-the-art DX+ technology to optimise cost performance and reduce energy consumption.

Murray said the project will allow Alba to continue its marketing strategy of maintaining its core presence in the GCC and, leverage its global sales offices to directly market the additional metal produced to meet the growing international demand for aluminium.

Rio Tinto reduces aluminium expenditure

Australian Mining - December 9th, 2015

Rio Tinto have boasted a $45 million reduction in sustaining capital expenditure for their Aluminium product group, as well $300 million worth of cash cost improvements to the end of 2015.

The company anticipates further improvements in 2016, with increases in bauxite, alumina and aluminium output.

Bauxite is expected to increase by four per cent to 45 million tonnes per year, alumina by three per cent to eight million tonnes, and aluminium by ten per cent to 3.6 million tonnes.

The recent announcement of the Amrun project in Northern Queensland, due to come online in 2019, will represent a further projected boost to the Rio Tinto Aluminium business.

Amrun will require $1.9 million in capital investment with an anticipated return of 20 per cent, thanks to more than of the future output already committed on off-take agreements.

Rio Tinto Aluminium chief executive Alf Barrios said the company had made significant advances in transforming their Aluminium business, thanks to "exceptional bauxite deposits and world-class aluminium smelting capacity".

"There are short-term challenges, but aluminium is a metal in increasing demand which will bring the market into balance," he said.

"Our value-added, low-carbon aluminium has a strong market position, enabling us to capture additional margin and premium throughout the cycle.

"With the development of Amrun, we are able to grow our high-quality bauxite output into rising market demand.

Rio Tinto to increase aluminium output in 2016 despite global surplus

Reuters - December 8th, 2015

Global miner Rio Tinto (RIO.L) plans to boost aluminium production next year by about 10 percent due to productivity improvements, it said on Tuesday, despite a global surplus weighing on prices.

Hard-hit prices will remain under pressure until loss-making producers slash output, Rio said.

Rio (RIO.AX), one of the world's biggest producers of the metal used in transport and packaging, told a presentation in London that it targeted output of 3.6 million tonnes in 2016.

"Just what the world needs, more aluminium," said analyst David Gagliano of BMO Capital Markets in a note.

Benchmark aluminium prices CMAL3 on the London Metal Exchange has shed about a fifth this year, sinking to the lowest levels in over six years, mainly hit by over-production in top producing country China.

Gagliano said Rio's plans to increase output was more than expected, prompting him to boost his estimate of the global aluminium surplus next year by 160,000 tonnes to 1.1 million tonnes.

Rio does not expect a speedy recovery of the market, said Gervais Jacques, managing director of aluminium sales and marketing.

At current prices, about half of all aluminium capacity is loss-making, so more shutdowns and closures are expected from high-cost producers, he said.

"Until this happens, prices will remain under pressure," Jacques said. "But industry players are reluctant to carry through their intentions and governments are quick to provide subsidies to players under stress."

Pahang, Putrajaya to decide on bauxite mining by end of the month

The Malaysian Insider - December 7th, 2015

Putrajaya and the Pahang government will announce a plan for dealing with bauxite mining activities in the state by the end of this month, Menteri Besar Datuk Seri Adnan Yaakob said today.

"The state government and the Ministry of the Natural Resources and Environment will make an announcement soon. Do not worry, it will be for the good of the people," he said after attending a function at Indera Mahkota in Kuantan today.

Adnan's administration has been criticised for its slowness in dealing with rampant bauxite mining and the resulting pollution.

He told The Star in August that Pahang could not immediately put a stop to the mining out of consideration for those who earned a living from it. He said bauxite mining generated economic activities that had spin-off effectsfor the state.

PKR's Kuantan MP Fuziah Salleh however has been urging Putrajaya to expedite the suspension of bauxite export licences to resolve pollution arising from the mining and transportation of the substance in the port city of Kuantan and surrounding areas.

She said the government had agreed with her suggestion as the best way to deal with pollution.

Fuziah in early November said water supply from Bukit Saga and Bukit Goh in Kuantan, Pahang, might already be contaminated with heavy metals as a result of bauxite mining in the area.

The PKR lawmaker raised this possibility after seeing evidence of miners washing bauxite upstream.

Widespread mining of bauxite, using to make aluminium, began last year, with most of it being supplied to China.

Indiscriminate mining and transportation of the ore from the mines to the port at Kuantan has caused air pollution.

National news agency Bernama recently reported that after a crackdown by Pahang authorities, only 11 mining operators were granted permission to extract bauxite as well as transport and export the mineral in the state. – December 7, 2015.

Rio approves $US1.9bn bauxite project

The Oceanside Post - December 6th, 2015

Most of the capital spending on Amrun would be in 2017 and 2018 with shipping from the mine expected to start in 2019, Rio said. 'Amrun will be significant in helping to meet growing bauxite demand from China', Mr Walsh said.

Much of the early output from Amrun will offset declining production from another mine on the Cape York peninsula-East Weipa-where ore reserves are running out.

The planned initial output is 22.8 million tons a year, replacing production from the depleting East Weipa mine and increasing annual bauxite exports from Cape York by around 10 million tons.

Known as the South of Embley project, the expansion has been expected for three successive years, but had so far been deferred by the Rio board.

Producers are adding new bauxite capacity as China's imports surged 49 per cent to 6.8 million metric tonnes in September, the highest since January 2014, according to customs data.

"We are seeing a great interest by a number of Chinese players", Alf Barrios, Rio's chief executive officer of aluminium, said on Friday in a phone interview from Brisbane. Sceptics who have watched Rio Tinto sink billions of dollars to expand during the boom years while its share price has sunk to close to a six-year low question the wisdom of pouring money into a project now.

he company invested billions expanding its network of iron-ore pits and infrastructure in Australia's west in recent years and has since been criticized for becoming too reliant on the steelmaking ingredient, which trades atits lowest price in almost a decade. There was no official reaction from Rio Tinto.

"The commission is satisfied that the mine complex's significant benefits outweigh its potential impacts", the New South Wales state Planning and Assessment Commission said in a statement.

Rio Tinto's South of Embley bauxite mine and port development was approved by the Australian Environment Minister Tony Burke in May 2013.

Despite the climate change mitigation initiatives of governments aimed at curbing the use of coal, Rio Tinto is still upbeat that coal will continue to have its future in the world's energy mix, at least for the next 50 years.

Queensland Premier Annastacia Palaszczuk said it would be the single largest private investment outside the southeast of Queensland in "many many years".

Chinese Firm to Kick Off Construction on Bintan Bauxite Smelter in January

Jakarta Globe - December 3rd, 2015

Jakarta. Shandong Nanshan Aluminium, China's second-largest aluminum producer, will start construction on its $2 billion manufacturing complex in Bintan, Riau Islands, in January.

The company is set to build a smelter, dams and a 2,800-megawatt power plant to produce aluminium ingots, powder, foil and sheet, Riau interim governor Agung Mulyana said on Thursday.

"It has been decided that we will establish a 2,000-hectare industrial complex in Bintan," he said, adding that the company would source bauxite from Kalimantan.

The plant is estimated to create between 7,000 to 9,000 jobs for local residents and 2,000 positions to be filled by foreign workers.

The company provided no information on the facility's maximum capacity, but earlier reports suggested that Nanshan aimed to produce 2.1 million tons of alumina and 570,000 tons of aluminum ingots each year.

Riau would also benefit from 300 megawatts of excess power from the plant, Agung said.

Still, when the project was first announced in 2013, the government said Nanshan Aluminium would invest $5 billion and complete construction by October 2016.

Agung declined to elaborate on the reasons behind Nanshan's drop in investment or on the delay.

Nanshan Aluminum is listed in the Shanghai Stock Exchange and reported more than $16 billion in revenue last year. The company sells its products to Australia, America, Canada, Italy, Singapore and Hong Kong.

Indonesia's ban on mineral ore exports has choked supply of bauxite for China, which until last year sourced most of its ore from Indonesia.

Indonesia Asahan Aluminum (Inalum) now operates the country's only aluminium smelter in Kuala Tanjung, North Sumatra.