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Aluminium/Bauxite

Aluminum Seen Riding for Fall as Chinese Speculators Pile In (Bloomberg News – April 26, 2016)

http://www.bloomberg.com/news/

After steel comes aluminum. Futures traders in China have flocked to the lightweight metal used in beer cans and car parts, stoking a rally and setting the market up for a potential slump in the second half as smelters fire up new or idled smelters.

Aluminum is trading around a 10-month high on the Shanghai Futures Exchange after volume more than quadrupled in four days to about 1.04 million contracts on Monday, the most since December. That echoes the performance of steel reinforcement bar last week, when prices rose 20 percent in four days as trading ballooned.

While strong demand and tight supplies in the first quarter drove up aluminum futures, the risk is growing that prices will climb too far, according to analysts at CRU Group, AZ China Ltd. and Bloomberg Intelligence.

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Bauxite mining politicised; I would like to break that jinx: Tom Albanese – by Kunal Bose (Business Standard – April 18, 2016)

http://www.business-standard.com/

Interview with Chief Executive Officer, Vedanta Resources

The right place to build aluminium smelters is where bauxite, coal and capital are available, Vedanta Resources Chief Executive Officer Tom Albanese tells Kunal Bose. Ideally, there should also be an expanding local market for the metal. Albanese says India has it all. Edited excerpts:

Your chairman, Anil Agarwal, says India has abundant natural resources and demand potential to lift annual aluminium smelting capacity to 20 mt from 4.1 mt. Is he not too optimistic, since a lot of local capacity now remains idle?

The question is, will demand be there in future to support that kind of capacity build-up? For local demand of 20 mt, we have to have a very long-term perspective, pitched on multiple decades of eight per cent annual gross domestic product growth. Now, the issue is: From where will India get that big a volume of aluminium?

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Alcoa Results Hurt by Weak Aluminum Prices – by Tess Stynes and John W. Miller (Wall Street Journal – April 11, 2016)

http://www.wsj.com/

Alcoa Inc. said its first-quarter earnings fell 92%, hurt by weak aluminum prices, and said it could cut as many as 2,000 jobs. The metals maker’s lukewarm results Monday underscore the company’s motive in spinning off its more profitable aerospace and automotive-focused business in the second half of this year.

The company is in the process of spinning off its faster-growing business units into a separate company, to be named Arconic. Alcoa reiterated that the spinoff remains on track for completion in the second half of this year and noted that profit grew at those businesses in the first quarter.

“Profits grew in all of the Arconic segments, led by automotive and aerospace,” said Chief Executive Klaus Kleinfeld. And the raw aluminum segments, he noted, “maintained profitability in a persistently low pricing environment.”

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Alcoa Looks to Finally Break Metal Shackles as Profit Sinks – by Sonja Elmquist (Bloomberg News – April 11, 2016)

http://www.bloomberg.com/

Alcoa Inc. has an identity problem, and it’s something Chief Executive Officer Klaus Kleinfeld is hoping to finally fix.

For years, the company tried to persuade investors to value it more for its engineering prowess than its exposure to a global metal glut. After all, it now gets more revenue from car, airplane and building parts than from primary aluminum. The stock, though, still trades more like a miner than a manufacturer, losing 26 percent over the past 12 months.

In September, Kleinfeld said he’d split the company, separating units that make metal products from those that make the metal itself. With the release of earnings results on Monday, investors will be watching for evidence Alcoa can boost sales enough in the downstream parts business to offset the falling metal price.

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UPDATE 1-Malaysia extends bauxite mining ban by another three months (Reuters U.S. – April 8, 2016)

http://www.reuters.com/

Malaysia will extend its ban on bauxite mining by another three months, effective April 15, in order to clear stockpiles and remove the risk of the aluminium-making ingredient contaminating the country’s rivers, the environment minister said on Friday.

While lower output at the world’s top exporter of bauxite threatens to interrupt supply to the world’s biggest aluminium producer, China, traders expect the impact to be limited given China’s ample stocks of the raw material.

Malaysia’s largely unregulated bauxite mining industry has boomed in the past two years to meet demand from China, filling in a supply gap after Indonesia banned exports, but the frenetic pace of digging has led to a public outcry with many complaining of water contamination and destruction of the environment.

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ITC Probe Could Pave the Way for Aluminum Import Tariffs – by John W. Miller and Scott Patterson (Wall Street Journal – April 7, 2016)

http://www.wsj.com/

The U.S. International Trade Commission said Wednesday that it will investigate the global aluminum trade and its impact on the U.S. aluminum industry, an inquiry that could help pave the way for new import tariffs.

The ITC said it would look into foreign government policies that drive overproduction, a swipe at China, which has drastically increased output of the metal this century, contributing to falling prices and the closing of U.S. smelters.

The ITC said it would hold a hearing Sept. 29 and deliver its report to the House Ways and Means Committee by June 24, 2017. The investigation was requested by a letter sent to the ITC in February by the committee. House Ways and Means Committee.

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‘Berserk’ Aluminum Boom Signals Ore Bonanza for China’s Quarry (Bloomberg News – March 30, 2016)

http://www.bloomberg.com/

Key aluminum ingredient bauxite is shaping up as China’s newest obsession in its mission to secure raw materials and once again minerals-rich Australia is a major target.

China’s investment in Australia’s mining industry plunged along with the global commodities rout, dropping in 2015 to the lowest since 2008 as surging supplies created gluts of materials including oil and iron ore. It’s a different story unfolding for bauxite, with a potential step up in interest led by Aluminum Corp. of China, known as Chinalco, which confirmed it’s looking at investing in projects in Australia.

Demand in China for the aluminum needed in air conditioning units to airliners will rise by almost a third by 2020, according to Morgan Stanley, while the nation’s supplies of adequate raw materials to produce the metal are dwindling — spurring imports and encouraging new investments overseas in countries including Australia and Guinea.

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China Hongqiao Is Devouring The Global Aluminum Industry – by Gordon G. Chang (Forbes Magazine – March 20, 2016)

http://www.forbes.com/

On the 14th of this month, the chief executive of China Hongqiao Group, the world’s largest aluminum producer, said his company would raise annual capacity by 16% this year, spending 15 billion yuan ($2.3 billion). Zhang Bo’s announcement sent prices of the metal tumbling.

Last year, Hongqiao’s capacity hit 5.2 million tons. This year, the plan is to take that to just a few notches over 6.0 million.

There is already far too much aluminum capacity, both in China and elsewhere, and investors initially did not like Hongqiao’s debt-fueled plan. Shares of the Hong Kong-listed firm fell the following day.

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COLUMN-China should follow Elvis’s advice for more action, less conversation – by Clyde Russell (Reuters U.K. – February 24, 2016)

http://uk.reuters.com/

Feb 24 – If you were to pick one thing that would do the most to help embattled commodity producers around the world, dealing with China’s massive over-capacity would probably rank highest.

It’s no secret that China’s surplus capacity in steel, aluminium, cement, flat glass and other intermediate commodities is keeping prices low and threatening the viability of global resource companies, as well as the health of the Chinese economy.

There certainly have been repeated statements from Beijing that the issues are being tackled, and it appears the authorities have realised that excess capacity is a far bigger threat than what it was during the prior boom years, when double-digit economic growth rates masked mounting problems.

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Alcoa Sees Record Aluminum Deficit Even as Goldman Predicts Glut – by Joe Deaux and Sonja Elmquist (Bloomberg News – January 27, 2016)

http://www.bloomberg.com/

Alcoa Inc., which is spinning off aluminum assets later this year, sees something that much of the market doesn’t: an end to the prolonged surplus that left prices near a six-year low.

With about half the world’s aluminum plants losing money, the U.S. company that invented the domestic industry more than a century ago says global demand will exceed production this year by a record 1.2 million metric tons, forcing car and appliance makers to draw down inventories. While others predict smaller deficits, many banks including Goldman Sachs Group Inc. and producers like Norsk Hydro ASA say the glut will only get bigger.

Prices tumbled 19 percent last year, the most since 2008, and reduced output has been indicated in China, home to about half the world’s smelting capacity. But energy prices have kept plunging and the yuan is weakening.

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Aluminum Island Offers Cheap Power Oasis Amid Commodities Tumble – by Omar Valdimarsson (Bloomberg News – February 14, 2016)

http://www.bloomberg.com/

Iceland’s aluminum smelters are doing just fine even as the deepest market plunge in about seven years pressures production across the world.

That’s because most of them tap cheap power from the north Atlantic island’s vast stores of geothermal and hydro-power in contracts that are linked to the price of the metal. The island’s three smelters, run by Rio Tinto, Century Aluminum and Alcoa, last year contributed 38 percent of the $15.6 billion economy’s total exports.

“There are about 300 aluminum smelters in the world and there are probably fewer than five smelters anywhere that are paying less for power than Alcoa and Century pay in Iceland,” Ketill Sigurjonsson, chief executive officer of consultant Askja Energy Partners, said in an interview.

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NEWS RELEASE: Rio Tinto and Indspire launch $2 million award program for Indigenous students in Canada

MONTREAL, Feb. 11, 2016 /CNW Telbec/ – Rio Tinto has partnered with Indspire through a $1 million contribution to establish the Rio Tinto Award for Indigenous Students. Rio Tinto’s contribution is being matched by the Canadian government, for a total of $2 million.

Alf Barrios, chief executive of Rio Tinto’s aluminium group stated: “We are very proud to establish the Rio Tinto Award for Indigenous Students through our partnership with Indspire, an Indigenous-led charity that invests in the education of Indigenous people in Canada.”

“Rio Tinto has been invested in Canada for over 100 years and we have a long history of working closely with Indigenous people across this great county. At Rio Tinto, we know just how critical education is to the success of the communities in which we work, and to the success of our business.”

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Bauxite prices boosted by temporary ban on mining in Malaysia – by (Strait Times/Bloomberg – January 26, 2016)

http://www.straitstimes.com/asia

KUALA LUMPUR (BLOOMBERG) – Bauxite mining in Malaysia went on a tear after neighbouring Indonesia banned exports, transforming an industry that hardly existed until 2013 into China’s biggest supplier.

In September alone, China bought a record 3.7 million metric tonnes of Malaysian aluminum-rich bauxite. It was a US$170.8 million (S$244.3 million) windfall for the oil palm-covered hills in eastern Pahang state, where dozens of companies have rushed in, paying smallholder-farmers for their land to be dug up.

Now, chunks of farmland resemble moonscapes of bauxite quarries and dusty rock piles, which some residents, including Pahang royalty, say have polluted the environment. In response, the government halted mining on Jan 15, starting a three-month moratorium to gain control over an industry that has exposed gaps in Malaysia’s mining laws.

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Aluminum stockpiling fund gives glimpse of China metals reforms – by Polly Yam and David Stanway (Reuters U.S. – January 21, 2016)

http://www.reuters.com/

HONG KONG/BEIJING – China’s plans to set up funds to manage coal and steel capacity closures and stockpiling schemes offer nervous markets some clarity on the likely future make-up of the country’s sprawling and predominantly state-run metals and mining industries.

As the world’s largest producer of aluminum, steel and other metals, and the biggest consumer of copper and iron ore, China is crucial to global metals markets which have slumped in the past year as Chinese industrial demand growth slowed.

China’s slowdown has hit revenue at global miners such as BHP Billiton and Rio Tinto, and the market is keen to know what China plans for its own state-run mining and metals giants – many of which have kept producing even as prices drop below the cost of production.

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Bauxite in Malaysia: The environmental cost of mining (BBC News – January 19, 2016)

http://www.bbc.com/

Bauxite mining has become a controversial political issue in Malaysia. As the government implements a temporary ban on extracting the aluminium ore, BBC South-East Asia correspondent Jonathan Head visits the most-affected area.

Amid the monotonous dark green lines of Malaysia’s endless palm oil plantations, there are now vivid red gashes in the hills behind the east coast town of Kuantan. These have appeared only in the past 18 months, as a frenzy of open-cast bauxite mining gripped Pahang province.

Tonnes of bauxite are being transported out of the region. It is the world’s main source of aluminium so is vital for the construction of everything from airplanes to saucepans and cooking foil.

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