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Rio Tinto Gets Approval For Amrun Bauxite Mine In Australia

OR-POLITICS - November 30th, 2015

The project's design provides options for future expansion to 50 million tonnes a year. The region supplies the bauxite used to produce roughly 10% of the world's aluminum. "We're seeing a slowdown in demand as the global economy slows, particularly commodity intensive economies like China", Russ Koesterich, global chief investment strategist at BlackRock Inc., the world's largest money manager, said Wednesday in a Bloomberg TV interview. The Amrun project, near Weipa in Queensland state, includes a bauxite mine, processing facilities and port, and will have initial production of about 22.8 million metric tons a year, London-based Rio said Friday in a statement. "It is a tier-one asset that will deliver significant benefits to our stakeholders". Walsh noted that Amrun would "certainly achieve" more than the company-wide internal rate of return benchmark of 15 percent. Deutsche Bank mining analyst Paul Young said the approval is a "significant signal to Rio shareholders" particularly that the company is willing to invest in growth against the cycle. Still, the go-ahead from PAC will likely reinforce Rio's attempts to sell its Hunter Valley assets, which are valued at about $3.5 billion. Rio has also changed the name of the mine to the Aboriginal word Amrun, a traditional indigenous name for the area. While Malaysia is now the top exporter of bauxite to China, it won't be able to compete long term with Australian producers, Rio's Barrios said in the interview. There are a handful of other investments awaiting signoff by Rio Tinto's board, including the development of an underground mine at Oyu Tolgoi in Mongolia and the proposed Silvergrass iron-ore mine in Western Australia. 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.

Beijing considers bailout for stricken aluminum industry: sources

Reuters - November 27th, 2015

China's state stockpiler is considering buying more than 1 million tonnes of aluminum from local smelters, sources said on Friday, an initial sign that Beijing could agree to the first major bailout in its embattled metals industry since 2009.

News that the central government might scoop up a sizeable portion of domestic inventory in a bid to shore up struggling smelters stunned some traders, who said the strategy to increase state reserves would offer only short-term support to prices as the demand would be artificial.

Shifting metal into storage would do little to get rid of the structural overcapacity that has pushed international prices to decade lows and helped create global oversupply, the traders said. Estimates on the world glut range between 8 million and 12 million tonnes.

The potential purchase, worth over $1.5 billion at current prices, would be part of a broader plea for help by aluminum, zinc and nickel producers and state-controlled metals industry body, China Nonferrous Metals Industry Association (CNIA), earlier this week. It equates to about 40 percent of China's output in October.

The State Reserves Bureau (SRB) did not immediately respond to a request for comment.

The discussions centered on tonnage and pricing, two Chinese industry sources familiar with the possible move said on Friday.

"The amount would be bigger than the market has estimated," said an industry official who has direct knowledge of the discussions, adding that the volume could be about 1.5 million tonnes. Some market participants had expected an amount around 900,000 tonnes.

The official said the government wants to ensure the deal provides cash to help operating smelters stay open, while also making sure the offer doesn't prompt smelters to reopen idled capacity.

One option was to pay prices based on state-owned smelters' cash production costs, an executive at a medium-sized smelter said, adding that the state stockpiler would most likely buy the metal from state-owned firms.

Prices on the Shanghai Futures Exchange have surged over 5 percent this week in their best weekly performance in almost a decade amid hopes that state-buying would remove excess inventory from the market.

While the move in percentage terms was big, prices were recovering from their weakest in a decade hit earlier this week and are still close to or below the cost of production for many smelters.

The second source said the state could buy more next year after an initial purchase. Both sources declined to be identified due to the sensitivity of the matter.

China's state stockpiler has in recent years bought thousands of tonnes of surplus aluminum, zinc and nickel to support prices, but this deal would mark the first major government move to shore up the metals industry since 2009.

Six years ago, SRB went on an aggressive buying spree in copper, lifting the market out of one of its worst-ever slumps.

It is not clear whether the SRB is considering throwing a similar lifeline to the zinc and nickel sectors.

Aluminum smelters have shut about 3.5 million tonnes of annual capacity so far this year, a CNIA report released on Friday said. Idle capacity could reach 5 million tonnes by the end of this year, it said.

Rio Tinto to approve South Embley bauxite expansion projects soon

International Business Times - November 26th, 2015

Mining major, Rio Tinto (LON. RIO) will soon approve the revival of its long-stalled US$1 billion (AU$1.38 billion) South of Embley bauxite expansion project Australia. Rio Tinto is the world's second-biggest bauxite miner and bauxite is the essential input for producing aluminum.

The project has been facing trouble from protracted delays in official approvals and opposition from environmental groups. The South of Embley project is critical to Rio Tinto's success in the bauxite mining business in the region, reports Reuters.

Recently, company's CEO Sam Walsh visited the project site, during a trip to Australia, indicating the new interest in the project. There was no official reaction from Rio Tinto.

The Australian Financial Review said in a report that Rio Tinto expects the South of Embley project in Weipa area of Queensland to be as lucrative as its Pilbara iron ore mines. According to estimates, the project will initially produce 22.5 million tonnes of bauxite each year, in which 10 million tonnes will be replacement tonnage for Weipa. The capacity will be progressively expanded to reach 50 million tonnes a year. The project is central to Rio's attempt to grab a substantial share in seaborne bauxite trade.

Will try to keep loss-making Lanjigarh unit running: Vedanta

The Economic Times - November 24th, 2015

Pinning its hope on the Odisha government for raw material linkage, Vedanta Group today said it will try its best to keep the refinery at Lanjigarh running despite sustaining huge losses.

"We will try our best not to shut down the plant as we are hopeful that the state government has been doing something to meet our requirement of raw material to run the refinery," Vedanta (Aluminium) CEO Abhijit Pati said after attending a meeting chaired by Chief Secretary G C Pati here.

Abhijit Pati said the refinery requires at least three lakh metric tonnes of bauxite ore per annum.

At present, the production capacity of the refinery has fallen by about 50 per cent due to non-availability of raw material, he said.

The Vedanta Group, which has set up a 1 MTPA refinery at Lanjigarh in Odisha's Kalahandi district, had earlier initiated process for gradual closure of the plant due to shortage of raw material.

Pati said the Lanjgarh refinery was facing a daily loss of about Rs 3 crore.

"Despite huge revenue loss, the company will try to keep the refinery running as Vedanta Chief Anil Agarwal says aluminium is the future," Pati pointed out.

CORRECTED-COLUMN-Is the curtain coming down on U.S. aluminium smelting?

Thomson Reuters - November 24th, 2015

At the end of the last century the United States was home to 22 aluminium smelters, all but one of them operating.

By the end of this year there will be just eight, of which only four will be producing metal, two of them at reduced rates.

The latest round of closures, led by Alcoa, is happening just as the metal's usage in the United States is set to experience another quantum leap forward.

Aluminium has made steady inroads against steel in the automotive sector, a process that is going to markedly accelerate with the roll-out of the mass-market F-150 pick-up truck.

Number one on the list of "the tough 10 reasons every other truck is history", according to Ford's advertising campaign, is the fact the F-150 has a "high-strength, military grade aluminum alloy body."

It is a bitter irony for U.S. smelters that the low price environment that is forcing them out of business only adds to the attraction of incorporating aluminium into applications such as the F-150.

But the simple reality is that on a global basis there is too much of the stuff around.

That's why Alcoa's announcement this month that it is shuttering three out of four of its remaining smelters in the United States has generated so little lift to the aluminium price.

However, it does push the U.S. market into deeper supply-demand deficit, a development likely both to underpin regional premiums and heat up the exchange battle for trading those premiums.

AND THEN THERE WERE...

Alcoa's announcement that it is mothballing another three of its U.S. smelters leaves it with just one operating plant in the country, Warrick in Indiana, with a capacity of 270,000 tonnes per year.

The shuttering of the Wenatchee and Intalco smelters in the state of Washington and the Massena West smelter in New York will remove around 500,000 tonnes of production.

It is part and parcel of Alcoa's drive down the cost-curve with a target of moving from the 43rd percentile this year to the 38th percentile next year.

This has been work in progress for Alcoa for some time but extra urgency comes from the company's plans to split into two entities next year.

The "old" Alcoa, comprising the upstream business of mining, refining, smelting and casting metal is being moulded into "a commodity business that is positioned to succeed throughout the cycle", to quote Klaus Kleinfeld, chairman and chief executive officer.

With the exception of Warrick, which benefits from its own captive coal power, its U.S. smelters apparently are being relegated to "swing capacity" status.

A similar process is underway at Century Aluminum, a U.S. producer majority owned by Glencore.

It owns three plants, not counting the Ravenswood smelter which was mothballed in 2009 and which is now to be permanently decommissioned.

All three are in trouble.

Operations at the Hawesville smelter in Kentucky have been reduced to two lines, or around 40 percent of the plant's 250,000-tonne per year capacity, to produce high-purity metal for local customers.

One of three potlines at the Sebree smelter, also in Kentucky, has just been mothballed, taking out around 70,000 tonnes of capacity.

Mt Holly in South Carolina, meanwhile, is scheduled for full mothballing by the end of this year unless a new power supply deal can be negotiated.

The only other U.S. smelter operating is the New Madrid plant in Missouri, part of Noranda Aluminum.

Noranda too, though, is feeling the heat, judging by its third-quarter results, which saw the company slide into a $26.4 million loss and write off any remaining goodwill in its smelting operations.

GLOBAL PROBLEM

U.S. smelter capacity has been bleeding away since 2001, when a cluster of west coast smelters shut up shop.

The process has been almost continuous since the global financial crisis of 2008-2009, which saw prices collapse and inventory mushroom as producers failed to react quickly enough to the implosion in manufacturing demand.

While China's massive infrastructure spend of 2009-2010 helped other metals such as copper, it failed to generate the same recovery in aluminium, because China itself was already a massive producer.

Indeed, the pace of new smelter capacity build-out in China's northwestern provinces such as Xinjiang has steadily increased to the point that the country now produces over 50 percent of the world's commodity-grade aluminium.

And it has been exporting ever larger quantities in the form of semi-manufactured product, some of which has challenged the definition of what exactly is a "product" rather than metal transformed just enough to duck China's 15-percent export duty and instead qualify for a VAT rebate.

"Fake semis" are a hot political subject in the United States right now with Century lobbying hard for action against what it sees as a flood as mislabelled China product, some of it from Chinese smelters enjoying local government subsidies in the form of reduced power tariffs.

But notwithstanding such concerns, there is the unpalatable fact for U.S. smelters that in an oversupplied global market-place they cannot compete with the new generation of smelters in China's northwest.

Sitting on their own captive coal fields, these plants benefit from low-cost power, state-of-the-art technology and efficiencies of scale. None of them are subsidised because they have no need for subsidies.

It's for that reason that the price has been steadily sinking to a point that at a current $1,450 per tonne, basis three-month metal on the London Metal Exchange, it is close to the troughs of 2009.

MADE IN CHINA?

The longer-term problem for the aluminium price is not current over-production but excess capacity, particularly in China.

While Alcoa and other U.S. producers have been willing to dismantle idled smelters after a few years of inactivity, there seems to be no similar process in China.

The fear is that any turnaround in price will be capped as such smelters fire up again and there's a lot more "swing capacity" in China than Alcoa's 600,000 tonnes or so.

But the decline and fall of U.S. smelting capacity should support one component of the price, the "local" Midwest premium, as the country becomes increasingly reliant on imports to meet its burgeoning demand for raw metal.

Part of the growing supply-demand gap will continue to be met by Canada, where smelters, including three owned by Alcoa, enjoy the power-price benefits of Quebec's massive hydro-electric system.

But more of it will have to come from further afield, from Russia and the Middle East, implying higher freight rates.

U.S. smelters' loss may turn out to be exchanges' gain with CME's Midwest premium contract already gaining traction and the LME this week launching its own set of premium contracts.

For U.S. manufacturers that may be an increasingly important hedging tool as the country's ability to supply its own needs diminishes.

And who knows?

Might there come a day when the Ford F-series pick-up, the "best-selling brand of trucks" in the United States (No. 10 on the list of "tough 10 reasons every other truck is history") is made from alloys cast from metal smelted in China?

$150 aluminium plant planned for Bahrain

Gulf News - November 18th, 2015

Mumtalakat, Synergies Castings could build plant in 18 months once approved, to produce equivalent of two million wheel alloys a year

Mumtalakat and India's Synergies Castings will build a $150 million downstream aluminium facility in Bahrain, the chief executive of the kingdom's sovereign fund said on Wednesday.

The aluminium casting and speciality alloy wheel manufacturing plant, will take around 18 months to build and is expected to open in late-2017, Mahmoud Al Kooheji told Reuters.

"There is a secure channel for the products as they have the customer demand, which will make it very easy to make profits," said Al Kooheji, adding that the joint venture was the first outside India for Synergies Castings, which supplies alloy wheels to car companies including General Motors, Ford and Toyota.

It will have an annual production capacity of around 25,000 metric tonnes, equivalent to around two million wheel alloys, Kooheji said.

The joint venture is split 51/49 per cent between Synergies Castings and Mumtalakat, with the latter helping to secure loans from Bahraini banks to finance its construction.

Kooheji said the amount of cash to be raised from banks would be determined later but both partners had pledged enough money to complete the plant without it.

Mumtalakat has been making a number of moves to develop Bahrain's downstream aluminium industry. The fund's head of industries and services said earlier this week that it was close to buying 49 per cent of Spanish aluminium products group Aleastur.

The fund owns the kingdom's stake in Aluminium Bahrain, which is currently expanding production capacity of the metal to 1.45 million tonnes per annum.

Kooheji said it was working on a number of deals to boost the downstream sector to absorb that increase in supply.

Russia's Rusal to decide on aluminium plant suspensions in mid-December

Reuters - November 17th, 2015

Russian aluminium giant Rusal plans to decide in mid-December which aluminium smelters to suspend as a part of its plans to potentially cut up to 200,000 tonnes of production, Chief Executive Vladislav Soloviev told reporters on Tuesday. Rusal, the world's top aluminium producer, is looking to cut production, under pressure from sliding prices due to a market surplus.

"We have not decided yet. We are now looking at KUBAL," Soloviev said. KUBAL, the sole producer of primary aluminium and the largest industrial facility in Sweden, has annual production capacity of 128,000 tonnes of aluminium.

"We will take a decision along with the business plan in December," Soloviev said.

He added that apart from KUBAL, Rusal was looking at the Kandalaksha smelter in North-Western Russia with annual capacity of 76,000 tonnes of aluminium production and the Novokuznetsk smelter in Siberia with another 195,000 tonnes, as potential plants for suspending.

Rusal has trimmed its forecast for global aluminium demand growth in 2015 to 5.6 percent and raised its forecast for a global aluminium surplus this year by a third to 373,000 tonnes.

Russia's Rusal to consider 200,000 T of aluminium output cut over next 6-9 months

Reuters - November 13th, 2015

ussian aluminium giant Rusal said on Friday it would consider cutting 200,000 tonnes of annual aluminium output over the next six to nine months.

"Rusal was considering output reductions in certain smelters as opposed to shutdowns through implementation of the active maintenance capex management program envisaging optimisation of scheduled maintenance on potline," Rusal's press-service said in an emailed reply to Reuters request.

Andhra Pradesh government gives nod to bauxite mining on forest land in Vizag

The Economic Times - November 6th, 2015

In a move that could trigger protests from tribals, the Andhra Pradesh government has given an approval for bauxite mining in 1,212 hectares of forest land in Visakhapatnam district with certain conditions.

According to a Government Order (GO), the Principal Chief Conservator of Forests has been accorded permission to divert 1,212 hectares of forest land in Chintapalli and Jerrila of Narsipatnam Forest Division in Visakhapatnam for mining lease for bauxite in favour of Andhra Pradesh Mineral Development Corporation.

The several conditions laid down by the government include that legal status of the forest land being diverted shall remain unchanged as well as the compensatory afforestation over non-forest land in extent to the forest land being diverted shall be raised and maintained by state forest department from the funds already provided by user agency.

Bauxite mining has been staunchly opposed by the tribals in Visakhapatnam for fear of losing their habitat.

Various political parties have also voiced their support to the cause.

Alcoa to curb production capacity

The Australian - November 3rd, 2015

Alcoa will curtail its smelting and refining capacity in a bid to remain competitive in the downbeat global resources environment.

In a statement today, Alcoa (AAI) announced it would reduce aluminium smelting capacity by 503,000 tonnes and alumina refining capacity by 1.2 million tonnes.

The curbs will take effect over time, commencing in the fourth quarter of 2015, with an aim to being completed by the end of the first quarter of 2016.

On the aluminium side, Alcoa will idle the Intalco and Wenatchee primary aluminium smelters in Washington state, and the Massena West smelter in New York.

With regards to alumina, the group will partially curtail refining capacity at its Point Comfort Texas facility by about 1.2 million tonnes.

Alcoa chief executive Klaus Kleinfeld said the group had consistently taken decisive actions to create a commodity business that is positioned to succeed throughout the cycle.

"In the face of continued adverse market forces, we are once again not standing still," Mr Kleinfeld said.

"These difficult but necessary measures will further strengthen our upstream portfolio, reducing our cost position and driving greater resilience as we prepare to launch this business as a strong stand-alone company in the second half of 2016."

Alcoa expects the curbs to further improve the cost position of the upstream business and ensure competitiveness in a lower pricing environment, including a 30 per cent drop in the Midwest transaction aluminium price year-to-date.

The group has been aggressively reshaping its upstream portfolio as part of a strategy to position itself as a low-cost global leader in alumina and aluminium production.

Including today's announcement, it has closed, divested or curtailed 45 per cent of total smelting operating capacity since 2007.

Century to idle one potline at Sebree aluminium smelter in US

mining-technology.com - November 2nd, 2015

Century Aluminum Sebree is set to close one of three potlines at its aluminium smelter in Sebree, Kentucky, US, by the end of December, cutting the facility's annual capacity by 70,000t.

Each potline contains 128 aluminum pots. The company made the announcement in accordance with the federal Working Adjustment and Retraining Notification Act (WARN).

Century issued a notice to 525 employees working at the smelter with regard to idling of the potline.

Century Aluminum president and CEO Michael Bless said: "We regret issuing this notice and absolutely recognise the impact it will have on our employees, in our community and with our customers.

"This is a direct result of Chinese overcapacity and the improper export of heavily subsidised Chinese aluminium products that has caused the significant decline in the price of aluminium."

Century said it is working with the industry and the US Government to address this immediately.

The Sebree facility is 100%-owned and operated through Century Aluminum, and produces approximately 210,000mt of aluminium at full capacity.

The smelter began operations in 1973 and has created more ten billion pounds of aluminium since then.

In October, Century Aluminum of South Carolina announced its proposal to cut plant operations in case the smelter fails to secure a competitively priced power arrangement to deliver energy to the plant.

Alcoa reports third quarter 2015 profit

Aluminium International Today - October 28th, 2015

Alcoa has reported a third quarter profit as its value-add and upstream portfolios delivered solid results in the face of strong market and currency headwinds.

Alcoa has been transforming by building its value-add portfolio for profitable growth and creating a globally competitive upstream business.

The company's successful multi-year transformation will culminate with the launch of two Fortune 500 companies, one value-add focused and the other upstream focused, expected in the second half of 2016.