AluNews - October 2015

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.

Norsk Hydro Reports Record Bauxite Production

Engineering & Mining Journal - October 22nd, 2015

Bauxite production reached record-levels this quarter for Norsk Hydro, reflecting the continued improvement efforts made over the last years in Paragominas, explained Svein Richard Brandtzaeg, president and CEO, Norsk Hydro.

"We continue to strengthen our bauxite operation, and have signed a letter of intent with Brazilian mining company Vale for the possible acquisition of Vale's 40% interest in the Brazilian bauxite producer MRN," Brandtzaeg said. "The record bauxite production, together with currency effects, also gave a historically low implied alumina cost for the quarter."

The company's earnings related to primary metals declined in the third quarter due to lower realized premiums and aluminum prices. A stronger U.S. dollar and somewhat higher sales volumes helped offset the decline.

Inalum expands capacity to double production

The Jakarta Post - October 16th, 2015

State-owned aluminum maker Indonesia Asahan Aluminum (Inalum) has allocated up to US$2.5 billion to finance a number of projects in order to help achieve a target of producing 500,000 tons of aluminum by 2020.

Among the projects are a new 200,000 ton capacity aluminum smelter and a steam-fueled power plant (PLTU) as well as the expansion of Inalum's designated port at Kuala Tanjung in North Sumatra.

Inalum president director Winardi Sunoto said that in order to accomplish the production target, Inalum would need a minimum of 1 million tons of raw aluminum material to process. Currently, the company's top production capacity is at 250,000 tons.

"With our expansions and our projects, we expect to be able to double our production by 2020," Winardi said on Thursday.

Regarding the projects, Winardi added that the power plant would break ground in 2016 and would take two to three years to build, while the new smelter would be built later.

According to Winardi, Inalum is aiming to produce 255,000 tons by the end of 2015, with a monthly production rate of 21,000 tons this year.

However, Winardi said his company would likely miss its target to achieve $104 million in net income amid a slump in commodity prices by 30 percent this year.

Meanwhile, Inalum signed a memorandum of understanding with state-owned diversified miner PT Aneka Tambang (Antam) on Thursday to jointly operate a smelter grade alumina refinery (SGAR) in West Kalimantan. The memorandum solidified the formation of a joint venture between the two companies, which will manage the construction of the bauxite processing refinery.

The refinery, which is expected to begin operations in 2019, will have a total production capacity of 2 million tons upon completion. Several foreign companies have been said to be involved in the project, including from the United Arab Emirates, Russia and China.

"Antam and Inalum's joint venture formation is the second step taken after signing the official memorandum on the project itself in July. The refinery will also increase the value of Antam's bauxite reserves through downstreaming practices," Antam president director Tedy Badrujaman said.

Antam's bauxite reserves processed at the new refinery will also enable Inalum to break free from depending on raw aluminum imports.

However, the joint venture will not be included in Inalum's five-year plan due to the project not being a wholly Inalum venture.

Alcoa nod for Pinjarra expansion

The West Australian - October 6th, 2015

Alcoa has flagged a move to expand production at its Pinjarra refinery by up to 20 per cent, winning environmental approval to push the facility's total alumina output to five million tonnes a year.

The Environmental Protection Authority last month ticked off on an Alcoa application to amend existing environmental approvals to boost the refinery's nameplate capacity from 4.2mtpa to 5mtpa, with a corresponding increase in mining at its Huntley bauxite operations.

A spokeswoman for Alcoa said yesterday the approval related to "potential future production" at the facility, and no major capital works were planned at Pinjarra.

"Any production increases would be achieved through incremental process efficiency improvements," she said.

It is understood the company hopes to push production rates up incrementally over the next two to three years as part of a broader productivity program.

It is unclear whether the incremental tonnes at Pinjarra could further push back Alcoa's much-delayed ambition to almost double the capacity at its Wagerup refinery to 4.7mtpa, which would require a multibillion-dollar capital spend at a time the aluminium industry still faces significant global headwinds.

The expansion plan was initially approved in 2006, but the global financial crisis forced it from the table.

Existing environmental approvals for the Wagerup expansion expire next September, unless it has begun substantial work by then, and the company is still to submit an application to extend that deadline.

A review into its global alumina operations is continuing, despite last week's announcement it planned to split in two and separate upstream mining operations from its specialist aluminium manufacturing.

Alcoa this year committed to a long-term future in WA, locking in a 12-year gas supply deal with Quadrant Energy. The deal, worth $US500 million in pre-payments to Quadrant, will see Alcoa take 120 terajoule a day to replace some of its historic supply from the North West Shelf.

Alcoa is also still believed to be exploring options to export bauxite directly from its South West operations.

Alcoa chairman Klaus Kleinfeld told analysts on its July quarterly investor call it had sent bauxite samples to customers for testing, but the company is still to announce any results from that programme.

While the move sparked some concerns Alcoa may seek to shift its refining capacity offshore in the future, it is understood its plans revolve around bauxite that cannot be processed at Pinjarra or its other WA refineries.

The EPA green light for the Pinjarra expansion includes approval for Alcoa to increase its greenhouse gas emissions from the plant by 10 per cent, to 2.6mtpa.

Century to continue operating two potlines at Kentucky operation

Mining Weekly - September 30th, 2015

Despite weak metal prices and a flood of low-priced exports from China, US primary aluminium producer Century Aluminum on Wednesday confirmed that it would continue running two potlines at its Hawesville, Kentucky smelter.

This rate represented about 40% of the plant's capacity from October 24 onwards and did not represent all the capacity Century announced in August it would idle.

A market glut amid slower-than-expected demand growth had dimmed aluminium spot prices over the last 12 months to trade near five-year lows.

The remaining operations at the Hawesville smelter would mainly produce high-purity aluminium and provide molten metal to local customers. The rate of continued production would be contingent on acceptable commercial conditions, including aluminium prices, product premiums and operating costs.

"Hawesville's ability to produce high-purity aluminium enables the smelter to produce a unique product that will hopefully allow the plant to survive, albeit at significantly reduced production levels, in today's market conditions," president and CEO Michael Bless commented.

He decried the fact that Hawesville's operations could not compete against the "improper export of unfairly-subsidised Chinese aluminium products".

"The continued expansion of Chinese aluminium capacity, coupled with the significant increase in unfairly-subsidised Chinese aluminium exports has caused the collapse in industry pricing and put this excellent plant in jeopardy. These issues must be addressed immediately," Bless stressed.

Century, which operated aluminium smelters and refineries in Iceland and the US, issued a new conditional federal Working Adjustment and Retraining Notification Act (WARN) notice to employees who would be impacted by continuing a two potline operation. The new WARN notice informed those employees that the remaining operation was expected to be curtailed if certain high-purity production levels were not achieved or if there was a material negative change in commercial circumstances. The previous WARN notice issued on August 25 remained in effect for the remaining employees.