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Aluminium/Bauxite

Is the curtain coming down on U.S. aluminum smelting? – by Andy Home (Reuters U.S. – November 24, 2015)

http://www.reuters.com/

LONDON – At the end of the last century the United States was home to 22 aluminum 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.

Aluminum 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.

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Tough road ahead for LME’s new steel, aluminum contracts – by Maytaal Angel and Eric Onstad (Reuters U.S. – November 20, 2015)

http://www.reuters.com/

LONDON – New steel and aluminum contracts to be launched next week by the London Metal Exchange (LME) are expected to attract initial interest from customers, but building up strong liquidity in the current bear market may be challenging.

The launch on Monday is a key element of a strategy by the LME’s owner, Hong Kong Exchanges and Cleaning (HKEx), to boost profitability at the 138-year-old exchange.

Three new contracts in steel rebar, steel scrap and aluminum premiums will go live nearly three years after HKEx bought the LME for $2.2 billion, pledging to widen the scope of the exchange from its core business in key industrial metals.

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Adoption of aluminum in auto industry slower than expected – by Jeff Sanford (Collision Repair Magazine – November 16, 2015)

http://www.collisionrepairmag.com/

Toronto, Ontario — November 16, 2015 — Once a quarter the world’s major publicly-traded corporations announce their earnings. Corporate executives appear before the press to offer explanations for exactly why their companies are making or losing money. One story that emerged this past earnings season involves the aluminum sector.

This past earnings season, the CEO of the world’s largest producer of rolled aluminum, Novelis, explained to investors that sluggish business at the company was a result of a slower-than-expected adoption of aluminum by the automotive industry. The big story in the metal sector over the last year has been the shift to wider use of aluminum in the automotive industry.

For decades, high-end vehicles have been made with aluminum. But over the last year the adoption of an aluminum body in the Ford F-150, the best selling car in America, was supposed to mark the beginning of a once-in-history shift from steel to aluminum for more mainstream vehicles.

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Diamonds Are Abundant – by Peter Diamandis (Huffington Post – November 16, 2015)

http://www.huffingtonpost.com/

Peter Diamandis is the Chairman/CEO of XPRIZE.

What’s more scarce than perfect diamonds, right? Wrong.

This week, a new company called Diamond Foundry announced that it is able to “grow” hundreds of perfect, “real” diamonds (up to nine carats) in just two weeks in a lab.

Announced “above the line of supercredibility,” with the backing of Leonardo DiCaprio and 10 billionaires, my friend Martin Roscheisen is about to disrupt an industry that has been built on scarcity for centuries.

More details on Diamond Foundry in a second… but in the meantime, this audacious company really begs the question: What is truly scarce?

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North Country aluminum giant Alcoa to lay off 500 in Massena and seal its toxins in riverbed – by Brian Nearing (Albany Times Union – November 9, 2015)

http://www.timesunion.com/

Massena – An aluminum smelting plant that has operated on the shores of the St. Lawrence River for more than a century is closing, taking with it hundreds of good-paying jobs in the North Country.

But while last week’s announcement by Alcoa means jobs will be lost, a troubled environmental legacy will linger at its sprawling, 2,700-acre Massena Plant at the Canadian border in St. Lawrence County.

Alcoa touts the plant, first opened in 1902, as the longest continually operating aluminum smelter in the world; since the 1950s, the plant has relied on a flood of cut-rate state hydropower provided by the New York Power Authority.

Last week, Pittsburgh-based Alcoa announced it was abandoning plans to modernize its Massena East Plant mothballed two years ago — formerly owned by Reynolds aluminum — and will close its newer Massena West Plant by the first quarter of 2016, throwing 500 people out of work. Smaller facilities at Massena for aluminum casting, forging and extrusions will remain in operation.

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UPDATE 1-Alcoa idling 3 U.S. aluminum smelters as prices bite (Reuters U.S. – November 2, 2015)

 

http://www.reuters.com/

Nov 2 (Reuters) – Alcoa Inc said on Monday it will idle three of its four active U.S. aluminum smelters, slashing annual capacity by 500,000 tonnes, in the steepest cuts yet by an aluminum producer to battle oversupply and sinking metal prices.

The company said in a statement it will suspend its Intalco and Wenatchee smelters in Washington state and the Massena West smelter in New York state. It will also permanently close Massena East, also in New York, which was shuttered in 2014.

The move will reduce Alcoa’s smelting capacity by a further 503,000 tonnes annually, leaving the Evansville, Indiana, smelter as its sole U.S. primary plant. It produces 269,000 tonnes per year.

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Odisha looks to revive bauxite mining in Niyamgiri hills – by Jatindra Dash and Krishna N. Das (Reuters India – October 28, 2015)

http://in.reuters.com/

BHUBANESWAR/NEW DELHI – Odisha is seeking to revive a controversial plan to mine for bauxite in the Niyamgiri hills, a lushly forested area that the Dongria Kondh tribe considers sacred, a minister said on Wednesday.

The proposal, which sparked an angry response from green groups, comes nearly two years after local residents successfully blocked a request by London-listed Vedanta Resources (VED.L) to mine in the area.

“We want the revival of this mining project because some local peoples’ representatives have told us (to do so),” Odisha’s steel and mines minister, Prafulla Kumar Mallik, told Reuters.

“Besides, it’s required to ensure long-term bauxite supply to the struggling aluminium industry including Vedanta.”

Vedanta Ltd (VDAN.NS), controlled by metals mogul Anil Agarwal’s Vedanta Resources, has set up a big alumina plant in Odisha betting on bauxite supplies from Niyamgiri.

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Aluminum prices down, output up, trade tensions boil over – by Andy Home (Reuters U.S. – October 26, 2015)

http://www.reuters.com/

LONDON – Aluminum touched a new six-year low of $1,479 per tonne in London last week.

It’s now trading at levels close to those seen during the depths of the Global Financial Crisis, when the London Metal Exchange (LME) three-month price fell briefly as far as $1,279 in February 2009.

And if you think that’s bad, the situation in China is even worse. The front-month contract on the Shanghai Futures Exchange (SHFE) closed Friday at 10,580 yuan per tonne, within spitting distance of the December 2008 trough of 10,040 yuan.

Basis the most liquid SHFE contract though, the price has already fallen far further than the 2008-2009 low of 13,665 yuan. At such depressed price levels, around 90 percent of China’s huge aluminum smelter sector is operating at a loss, according to consultancy AZ China.

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Meet the `Miserable’ Metal: Aluminum Sinks to `09 Low on Surplus (Bloomberg News – October 23, 1015)

http://www.bloomberg.com/

Dwight Anderson had a point when it came to aluminum. The price sank to the lowest level in more than six years on Friday on concern that a global glut will endure, extending a losing run after the hedge fund manager dubbed the metal as miserable.

Three-month futures fell as much as 0.4 percent to $1,484.50 metric ton on the London Metal Exchange, the lowest level since June 2009, and traded at $1,486 at 12:28 p.m. in Singapore. The metal is set for an eighth daily loss.

Aluminum fell 20 percent this year as global supply exceeded demand, with output from top producer China surging even as economic growth slowed, spurring increased exports.

Anderson, founder of hedge fund Ospraie Management LLC, described aluminum in an interview this week as “miserable,” probably forcing closures and bankruptcies. BNP Paribas SA expects a surplus of 1 million tons this year.

“The fundamental outlook is weak for the metal with some miserable factors like oversupply not easing in China even as prices keep falling,” Wang Rong, an analyst at Guotai & Junan Futures Co. in Shanghai, said on Friday.

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Ford’s F-150: Lots of Aluminum, Plenty of Awesome – by Kyle Stock (Bloomberg News – October 19, 2015)

http://www.bloomberg.com/

The gutsiest decision in the auto industry is beginning to pay off.

Three people, two dogs, a pile of gear, and a 3,000-pound boat. That’s how we tested the all-new aluminum Ford F-150. The result? Mileage ticked down from 21 miles per gallon to 13, as you’d expect, and the floor mats collected a layer of Labrador fur.

Ford’s famous pickup, the best-selling vehicle in America since the Reagan administration, has still got it. Even after Ford swapped out almost every steel body panel for a lightweight aluminum alloy. Even after it added a cute, sedan-size 2.7-liter engine.

Even after Chevrolet and a legion of gravel-throated truck fans deemed it wimpy and precious and expensive to fix. “It seems like a big change initially, but when people see the difference, they’ll ask ‘Why didn’t they do this sooner?’” said Michael Levine, the company’s truck talker.

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Linamar Corp’s biggest deal yet bets that the cars of the future are aluminum – by Kristine Owram (National Post – October 16, 2015)

The National Post is Canada’s second largest national paper.

Canadian auto-parts maker Linamar Corp. is betting that aluminum will continue to replace steel as automakers strive to produce more fuel-efficient vehicles, announcing the biggest acquisition in its 50-year history Thursday.

The Guelph, Ont.-based company has made an offer to acquire France’s Montupet SA for $1.16 billion plus debt, subject to shareholder and regulatory approval.

Montupet makes complex aluminum castings for the global automotive industry with a particular focus on cylinder heads, complementing Linamar’s existing aluminum machining business.

“Aluminum is becoming more and more prevalent in the vehicle,” Linamar CEO Linda Hasenfratz said in an interview from Paris, where she announced the deal.

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Aluminum premium bubble over? Just don’t tell the LME – by Andy Home (Reuters U.S. – October 7, 2015)

http://www.reuters.com/

LONDON – So is the aluminum premium bubble well and truly over? It certainly feels that way.

Japanese buyers have just secured a premium of $90 per metric tons over London Metal Exchange (LME) cash metal for their fourth-quarter shipments.

As recently as the first quarter of this year, Japanese premiums were at a record high of $425 per metric tons (468 tons).

Moreover, these Q4 2015 premiums are the lowest since the third quarter of 2009, marking a return to historical norms.

The scale of the collapse in Japanese premiums is partly down to specific local drivers but even that statement reflects a return to normality, where physical premiums don’t move in global lock-step but rather mirror regional supply-demand dynamics.

U.S. and European premiums are higher at around $155 and $120 per metric tons respectively but have fallen a long, long way since the start of this year.

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Aborigines have a right to economic development – by Wayne Bergmann (The Australian – September 30, 2015)

http://www.theaustralian.com.au/

In his victory speech, new Prime Minister Malcolm Turnbull announced: “There has never been a more exciting time to be alive than today and there has never been a more exciting time to be an Australian. We will ensure that all Australians understand that their government recognises the opportunities of the future.”

If federal, state and territory governments are to ensure that Aboriginal Australians are included in these “opportunities of the future”, it is obvious their first priority should be to support the economic initiatives of Aboriginal people.

Remarkably, some governments do not understand this. Take the most recent Queensland state governments.

On Cape York Peninsula near Aurukan, there’s $20 billion worth of bauxite waiting to be mined. The traditional owners of the area, the Wik and Wik Way people, eager to be part of the economic development of their region, formed a joint venture with an Australian mining company to create Aurukan Bauxite Developments and planned to mine the resource.

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BHP Billiton’s split may have lessons for Alcoa – by James Regan (Reuters U.S. – September 29, 2015)

http://www.reuters.com/

SYDNEY – In what could be a cautionary tale for Alcoa Inc, global miner BHP Billiton’s decision to spin off non-core businesses into a separate company is yet to pay off for shareholders.

Alcoa announced on Monday it will break itself in two, separating a faster growing plane and car parts business from traditional alumina and aluminum production as shareholders seek higher returns amid a commodity slump.

BHP used a similar rationale for ring-fencing select operations in Australia, southern Africa and South America into what became South 32 last May to concentrate on its most profitable commodities.

South32 shares fell to a record low on Tuesday of A$1.38, more than a third below its listing price. BHP stock, at A$21.61 at Australia’s Tuesday close, is the lowest in seven years.

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How Alcoa Inc’s split could finally bring it together with Alcan – by Jonathan Ratner (National Post – September 29, 2015)

The National Post is Canada’s second largest national paper.

Alcoa Inc.’s plans to split into two publicly traded companies isn’t expected to be completed until the second half of 2016, but that won’t stop it from looking to the future, which may mean some big acquisitions down the road.

Dividing the upstream and downstream businesses will draw attention to the company’s sum-of-the-parts valuation, but Michael Gambardella at J.P. Morgan doesn’t think that represents real value creation. The analyst thinks the plan could lead to modestly higher overhead costs and won’t generate any savings.

He suggested Alcoa would be wise to take a second step and combine the upstream business with another large aluminum producer, which should create significant additional value in a depressed metal price environment.

“This potential value creation could occur from significant cost cutting opportunities with greater scale and better market conditions from supply cuts, and potentially from further consolidation activities triggered by such a transaction,” Gambardella told clients.

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