AluNews - October 2016

China is most efficient aluminium producer nation

Fast Markets - October 31st, 2016

London 31/10/2016 – The most efficient aluminium smelters are not in the west, where government regulations and high energy costs have driven efficiency improvements, but where the main driver of increasing efficiency is simply to make more metal – China.

According to the International Aluminium Institute (IAI), China used an average of 12,875 kilowatt hours (kWh) per tonne of aluminium produced in 2015 compared with a global average of 13,403 kWh. It was the only region where rates have fallen below 13,000 kWh, which it has for the last three years.

Chinese smelters' energy efficiency has risen because the country has replaced old smelting facilities with new plants. Rather than the efficiency improvements stemming from upgraded smelting technologies, it is the sheer size of the new facilities that affords Chinese producers such economies of scale as to bring energy usage per tonne of metal produced to world-beating lows.

"China is scaling up the pot lines and the pots. The smelters are significantly bigger, and it's helping to lower energy consumption dramatically," Citi analyst David Wilson said.

The efficiency gains made by China in recent years are mostly because of bigger pots, Dr Mark Dorreen, director of the Light Metals Research Centre at the University of Auckland, told Metal Bulletin. And these advances are happening faster in China than anywhere else.

"Technology development is happening much faster in China, driven by the demand for new smelting capacity, than in the west and Middle East," Dorreen said. "It took 25 years for western pot technology to go from 300 kilo-amperes (kA) to over 500kA, while in China they have gone from 300, 400, 500 and over 600 to now 640kA in only ten years."

Although the Chinese plants use a higher amperage in the pots, the physical size of the pots means that average energy consumption per tonne of metal produced is lower than in western smelters.

"When compared with western technology of similar amperages, the Chinese pots are physically even larger again," Doreen explained. "This means that the current density [electric current per unit area] is actually lower. This is the main factor behind China's lower energy consumption per tonne of aluminium produced."

DEMAND FOR NEW FACILITIES DRIVES TECH IMPROVEMENTS

The speed of improvement in China is driven by demand for new facilities to produce more and more metal. These drivers are not present on other regions, where production growth has slowed far more than in China.

"In the west and in the Middle East they are not building many new smelters, so there isn't much demand for new tech," Dorreen said. "But in China, there is still demand for new smelters."

So big are the new Chinese smelters becoming that there are efficiency gains to be had not just in the pot rooms but all over the facilities. Although the overwhelming majority of the power an aluminium smelter is used in the cells, the power used in the rest of the plants is significant and is providing another efficiency avenue for the Chinese facilities.

And these efficiency gains are all being made despite little prompting from the government.

"China wants to make more metal. We're not seeing regulations as a significant factor, or we would have seen a larger impact on existing smelters," Dorreen said. "We were expecting a significant ramp-up in environmental regulations and enforcement, but we've not seen a lot of that yet. It is coming, slowly; however, there is a lot of improvement left to go."

Dorreen added a caveat to China's impressive efficiency statistics, however. Numbers reported in China tend to be taken from very early in a new smelter's lifetime, when it is operating at its optimal rate.

"Pot technology in China is capable of achieving very low energy consumption, however in practice the numbers claimed in most cases are not sustained over the entire lifetime of the pots," he said, but added that the disparity would not be enough to stop China being the most efficient producer.

Other producers in other regions are making similar strides in efficiency improvements, such as at Norsk Hydro's Karmøy pilot plant in Norway, which is targeting a similar efficiency to the most efficient new Chinese facilities, and Rusal, which recently launched the first RA-550 pot of a new generation running at over 550 kA at the Sayanogorsk aluminium smelter in Russia as part of a $28 million project.

"Hydro has ambitious energy consumption targets for its Karmøy pilot plant, apparently without any revolutionary breakthroughs," Dorreen said. "Other western pot technology developers such as Rusal, EGA and Rio Tinto are also on a similar pathway to lower energy consumption. The playing field is not so uneven as the numbers suggest."

But China is leading the way and is attempting to export its technology around the world. New-build smelters will exclusively be large facilities to take advantage of economies of scale. And China is trying to become the supplier of efficient aluminium smelter infrastructure and technology to the rest of the world. It has even been willing to provide financing for the new facilities.

"They've been trying to do that for some time and had success in India, Iran, Malaysia and Vietnam," Dorreen said. "This success is often linked to Chinese financial backing for the new smelters; however, it hasn't translated into newer western smelters picking up the Chinese technology yet."

Western smelters may not have picked up China's technology but they aren't building many smelters in the west any more.

Russian tycoon to buy 12 percent in Rusal from Onexim: sources

Reuters - October 27th, 2016

Russian billionaire Viktor Vekselberg and his co-investors in Sual Partners plan to buy a 12 percent stake in aluminium maker Rusal (0486.HK) held by Mikhail Prokhorov's Onexim group, two sources close to Vekselberg told Reuters.

They did not provide further detail.

Renova group, which manages Vekselberg's assets, Onexim and Rusal declined to comment.

Vekselberg has previously said he planned to complete the deal by the end of October but has not disclosed the size of the stake or its price.

Vedomosti daily earlier on Thursday quoted three sources as saying Vekselberg and his partner Leonard Blavatnik would pay up to $700 million for the stake.

The price would mean a 17 percent premium to the current market price, and the deal is due to close by the end of November, the newspaper added.

Russia's largest lenders Sberbank (SBER.MM) and VTB (VTBR.MM) could provide Sual Partners with a loan to finance the purchase, according to Vedomosti. Both banks did not immediately respond to a Reuters request for comment.

Rusal, the world's second-largest aluminium producer, is controlled by Oleg Deripaska and part-owned by trading group Glencore (GLEN.L).

Onexim and Sual Partners own 17 percent and 15.8 percent in Rusal respectively.

Negotiations about the deal come some six months after Russian law enforcement officials searched Onexim's offices in relation to a tax investigation into an unspecified firm or group.

Vedomosti then reported that Onexim had decided to sell all its assets in Russia, but the group said the report was inaccurate as its "assets are constantly in a state of transition".

Vekselberg's Renova group also saw armed state security agents in ski masks in its Moscow offices in September as Russian law enforcement officers investigating bribery allegations detained two senior executives who work with Vekselberg.

China's oversupply killing aluminium producers

Construction Week Online - October 23rd, 2016

China continues to frustrate metal producers globally with its excessive production and mass dumping.

While steelmakers globally have been protesting against China's cheap exports, aluminium producers too are facing a tough time, as the world's largest producer continues to churn out aluminium at low prices.

Fluctuating energy prices and volatile economic climate coupled with low priced Chinese imports are harming GCC's aluminium producers, forcing them to export a majority of its produce.

This was revealed at the Arab International Aluminium Conference (Arabal) 2016 press conference held at Madinat Jumeirah on 23 October, 2016.

Speaking to members of the media, Abdullah J. M. Kalban, managing director and CEO of Emirates Global Aluminium (EGA) revealed that there are many concerns among local consumers with regards to Chinese imports.

"There is severe competition coming in from Chinese imports into the local [UAE] markets with low prices and very good quality. This is forcing local producers to export most of their produce to Africa and Europe," he said.

"They are trying to mitigate their market share, Chinese [imports] are everywhere. Last year, China exported more than three million tonnes of aluminium, which put many producers out of business and led to closure of some aluminium manufactures," he added.

Kalban also said that China will continue its mass production and exports with more than 2.5-2.8 million tonnes to be exported in 2016.

"Due to China's oversupply, prices of aluminium dropped to $1,400 per tonne a while ago, and is hovering at $1,600 per tonne at the moment. We will not see 'fair prices' for the next couple of years," added the chief of EGA.

Mohammed Al Naki, secretariat chairman of Arabal also shared the same sentiment. "Prices at which China is selling aluminium is lower than the cost of raw materials."

While the Middle East primary aluminium industry's combined production was 5.59 million tonnes in 2015, most of it was exported.

Constellium adds automotive aluminium finishing line in France

just Auto - October 18th, 2016

Constellium has officially opened a new aluminium automotive body sheet finishing line in Neuf-Brisach, France, costing US$198m.

The new line is designed to meet the growing demand for alloy parts.

Production capacity is 100,000 tons and the 240 metre line has high-speed thermal treatment, temperature control, quenching process and greater flexibility on the thickness of processed alloys.

This will enable the supplier to make aluminium products for closure inners, outers and body-in-white. Though the new line is in the final stage of its qualification phase, it has already started commercial production.

Built in 1967, the Neuf-Brisach plant is an integrated aluminium rolling, finishing and recycling facility. Adding to the production capacity of aluminium automotive body sheet there, the supplier expects this additional finishing line to significantly boost automotive body-sheet production capacity in Europe to meet anticipated automotive market growth.

In Europe, stricter regulation of vehicles' CO2 emissions have resulted in an increasing demand for aluminium. With the rising importance of lightweighting, aluminium automotive body sheet volumes are expected to reach 700,000 tons in 2020, up from 230,000 tons in 2012.

Metro Mining signs bauxite deal with Xinfa Group

Finance News Network - October 13th, 2016

Metro Mining Ltd (ASX:MMI) has signed a binding bauxite off-take agreement with Chinese aluminium company, the Xinfa Group.

The Australian miner says Xinfa currently has a 4.3% shareholding in Metro, as well as significant refining and smelting operations across China.

Metro forecasts total annual production o up to 4 million tonnes from its Bauxite Hills Project.

Their agreement is for a 4-year term, and provides contract tonnage of 1 million tonnes in the first year of operation. It will then provide 2 million tonnes per year for the next three years.

Metro Mining reported a net loss of $6.8 million at 30 June 2016.

Novelis says global aluminum demand to grow 4-5 percent in 2017

Reuters - October 12th, 2016

Novelis Inc [NVLX.UL], the world's largest maker of rolled aluminum products, sees demand for the metal growing 4-5 percent in 2017, boosted by sales to carmakers and can manufacturers, company executives said on Tuesday.

"Globally we see somewhere around 4-5 percent of downstream rolled aluminum growth," Novelis Chief Executive Steve Fisher told Reuters in Seoul.

"That varies region to region, product to product, but that's kind of an overall growth rate that we see for aluminum through 2017," Fisher said.

In Asia, aluminum demand for both automobiles and cans is expected to grow faster than the rest of the world due to population growth and increasing environmental awareness.

"Cans could grow 5 to 6 percent in Asia, South East Asia will be 7 to 8 percent, but automotive 20 to 25 percent," said Sachin Satpute, President of Novelis Asia.

"I can tell you if electric vehicles come ... it will be exponential," Satpute said.U.S.-based Novelis supplies aluminum to automakers such as Jaguar Land Rover [TAMOJL.UL] and to drinks makers like Coca-Cola (KO.N).

Global aluminum makers have been boosting their capacity to meet rising demand from automakers looking for lighter alloys to replace high-strength steel and to use in electric vehicles.

"(For electric vehicles) the critical element is miles or kilometer per charge," said Satpute, adding that lighter weight components are crucial to making power charges last longer.

"For that aluminum is a perfect solution," he said.

Fisher said he expected competition with Chinese producers to be "very fierce" over the next five to 10 years in high-value-added aluminum sectors such as aerospace and automotive, which have so far been dominated by European and U.S. aluminum manufacturers.

"Certainly (Chinese aluminum makers) will be able to produce high quality products as well," he said.

At end-August, in the midst of a trade dispute, Zhongwang USA LLC said it would buy U.S. aluminum company Aleris Corp (ALSD.PK), marking the biggest entry by a Chinese company into the U.S. aluminum industry.

Asked about premiums on primary aluminum for next year, the Novelis chief said they should remain near current levels.

"We don't see what would drive them to move up significantly again as we saw a few years back," he said.

Fourth-quarter premiums in Japan were set at $75 a tonne, down 17-19 percent from the previous quarter and touching a seven-year low amid a supply glut.

Vedanta Q2 metal production hit due to snags, power outages

Despite the hurdles, the firm led by billionaire Anil Agrawal posted a record aluminium production of 2.96 lakh tonnes during the September quarter and saw its power sales rise year-on-year (y-o-y) helped by commissioning of additional units at TSPL and BALCO over the last year.

Moneycontrol - October 10th, 2016

Mining conglomerate Vedanta today said its production of zinc, copper and aluminium was affected during the July-September quarter due to reasons such as power outages, technical snags among others.

Despite the hurdles, the firm led by billionaire Anil Agrawal posted a record aluminium production of 2.96 lakh tonnes during the September quarter and saw its power sales rise year-on-year (y-o-y) helped by commissioning of additional units at TSPL and BALCO over the last year.

The company said copper production from Tuticorin smelter was 97,000 tonnes, marginally lower q-o-q.

"During the quarter, production was affected by an unplanned outage for ten days due to a boiler leakage at the smelter," it added.

In the aluminium segment, Vedanta said commissioning of pots at first line of the 1.25 million tonnes per annum (MTPA) Jharsuguda-II aluminium smelter was completed at the end of July 2016.

"However, it was impacted by a power outage in early August, following which 168 pots were taken out of production.

The impacted pots are currently being rectified, and 10 pots have re-started in early October 2016," it added.

Similarly its Balco facility too faced issues during the quarter.

"BALCO-II smelter was commissioned, with all 336 pots operational in August. However, there was a technical issue in early September, due to which 167 pots were taken out of production. Rectification work is in progress and these pots are expected to be re-started by Q4 2016-17," Vedanta said.

In Zinc, the firm's mines metal production increased primarily due to significantly higher production at Rampura Agucha open cast mine compared to Q1, when there was high waste excavation, in accordance with the waste-ore sequence.

However, it said: "Refined zinc and lead volumes during the quarter were lower y-o-y and higher q-o-q, in line with the mined metal production,." Commenting on the firm's performance, Vedanta Ltd CEO Tom Albanese said the firm delivered a strong operational performance during the June quarter.

"We have progressed on our ramp-up of aluminium and though we had some operational challenges, our full year volumes are not expected to be materially impacted," he added.

Vedanta achieved higher mined metal production at Zinc India and this upward trend is expected to continue in the second half, Albanese noted.

"We are extremely pleased that shareholders have approved the proposed Vedanta Ltd, Cairn India merger last month, and we expect the transaction to complete in the first quarter of calendar year 2017. This is an important strategic step in simplifying the Group," he said.

Saudi's Ma'aden starts commercial output at alumina refinery

Reuters - October 2nd, 2016

Oct 2 Saudi Arabian Mining Co (Ma'aden) said on Sunday that a subsidiary had started commercial production at a new bauxite mine and alumina refinery which could begin exporting some of its output in coming months.

Production will reach maximum annual capacity of 1.8 million tonnes of alumina by early 2017, meeting Ma'aden's domestic requirement of 1.4 million tonnes for its smelter and allowing the surplus to be sold elsewhere in the region and internationally, the company said.

The subsidiary is 74.9 percent owned by Ma'aden and 25.1 percent owned by U.S. firm Alcoa. The Saudi company said earnings from the venture would begin to have an impact on its results in the fourth quarter of this year. (Reporting by Andrew Torchia. Editing by Jane Merriman)