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Aluminium/Bauxite

COLUMN-Bauxite and the limits of resource nationalism – by Andy Home (Reuters U.S. – March 27, 2015)

http://www.reuters.com/

(Reuters) – It’s been over a year now since Indonesia imposed its ban on the export of unprocessed minerals. The aim of the January 2014 lock-down is to generate greater value for the country and its citizens by forcing operators to build processing plants and export value-added product not raw materials.

Other resource-rich countries, such as the Democratic Republic of Congo, are travelling the same road but Indonesia is way out in front.

The country’s high-stakes strategy, implemented in the face of considerable opposition from both its own mining sector and overseas buyers, does appear to be largely working.

At a practical level flows of nickel ore and bauxite to Chinese buyers have been halted. Indonesia’s mining ministry says there are now 11 nickel-processing projects under way, many of them backed by Chinese nickel and stainless steel producers.

The country’s two top copper miners, Freeport McMoRan and Newmont Indonesia, have been successfully cajoled into committing to a new copper smelter in return for keeping their mining rights.

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UPDATE 1- Indonesia may ease bauxite export ban to help fund refineries – by Wilda Asmarini (Reuters Africa – March 23, 2015)

http://af.reuters.com/

JAKARTA, March 23 (Reuters) – Indonesia is looking at easing its mineral export ban for bauxite producers to help promote the building of domestic processing capacity, a mines ministry official said on Monday.

Early last year Indonesia put in place export restrictions aimed at forcing miners to develop smelting and processing facilities so that it can increase the value of the minerals it produces and create jobs.

“We need a breakthrough in the law to accelerate bauxite smelter development,” Said Didu, head of the national smelter development team at the energy and mineral resources ministry, told reporters. “To accelerate bauxite smelter development, they should pay a guarantee bond to develop smelters to the government.”

The government has already offered a similar deal to copper miners, allowing them to export concentrates again after paying an export tax and a bond as a sign of good faith that they intend to build smelting capacity.

If bauxite miners have at least 30 percent of their smelter or refinery construction completed, they can apply for a government licence to resume some exports in order to get funding for the rest of their facility, Didu said.

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South32 looks better bet than parent BHP Billiton by Clyde Russell (Reuters U.S. – March 17, 2015)

http://www.reuters.com/

LAUNCESTON, Australia – (Reuters) – BHP Billiton has done a great job in making its spin-off South32 look attractive, perhaps to the point where it may be a better bet than its parent.

The world’s largest miner released documents on Tuesday outlining details for the new company, which will take over BHP’s aluminum, manganese, nickel, silver and some coal assets.

These assets are often described in the media as “unloved,” but the outlook for many of them is better than the core of iron ore, petroleum, copper and metallurgical coal that will remain with BHP. South32, so named for the line of latitude that links its main operating centers of South Africa and Australia, will get a head start from its parent.

The new company will assume only $674 million in net debt, about half the level analysts had expected, providing a boost to the management should they decide to pursue mergers and acquisitions. Analysts expect the new company, which will list in Australia, the United Kingdom and South Africa, will be worth up to $13 billion.

The South32 assets contributed net profit after tax of $738 million to BHP for the half year to December 2014, again an upside surprise that bodes well for the new company’s reception.

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Rio Tinto Alcan open to expanding Canadian smelters once market rebounds: CEO – by Ross Marowits (Canadian Press/Vancouver Sun – February 18, 2015)

http://www.vancouversun.com/index.html

MONTREAL – Rio Tinto Alcan plans to expand its smelting capacity in Canada once the fragile aluminum market gains strength, the mining giant’s CEO said Wednesday.

Alfredo Barrios says aluminum prices, which have retreated since rising last year, are not encouraging investment at the moment because of excess smelting capacity.

But strong long-term fundamentals, including demand expected to grow through 2025 in part from the automotive sector, should eventually encourage new investments.

“If the market starts improving and the returns start remunerating the investments then there are a number of projects that we have across the world, even in Quebec, to potentially grow,” Barrios, who took the helm last June, told reporters. He pointed specifically to a new Alouette smelter and expansion of its AP60 pilot project in Quebec.

“When the moment is right, Quebec is a clear place where we will be investing in smelting. That is where our core smelting business is.” However, the 48-year-old former oil executive wouldn’t say how long it could take before these new projects could be built.

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Rio Tinto’s aluminum division was mining giant’s best performer in 2014 – by Ross Marowits (Canadian Press/Winnipeg Free Press – February 12, 2015)

http://www.winnipegfreepress.com/

MONTREAL – After years of challenges, Rio Tinto’s aluminum division proved to be the mining giant’s best performer in 2014.

Underlying profits at the Montreal-based operations soared 124 per cent to US$1.25 billion, dramatically outpacing iron ore, copper, diamonds and energy, the company said Thursday.

Rio Tinto (NYSE:RIO) attributed the improvement to continuing cost reductions, productivity improvements, higher prices for valued-added products and weaker currency in Canada and Australia.

Aluminum was one of the few metals to see a price increase last year. On the London Metal Exchange, aluminum averaged US$1,867 per tonne in 2014, up one per cent.

Rio Tinto said value-added products, which represent 62 per cent of metal produced, allowed it to realize US$2,395 per tonne. Overall, the company’s underlying profits decreased nine per cent to US$9.3 billion, including a US$4.2-billion hit from lower metal prices, offsetting currency gains.

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COLUMN-China’s aluminium tug-of-war to repeat in 2015 – by Clyde Russell (Reuters India – February 12, 2015)

http://in.reuters.com/

LAUNCESTON, Australia, Feb 12 (Reuters) – Anybody looking at China’s vast aluminium sector may be struck by a sense of deja vu, as the issues of last year appear set for a repeat performance in 2015.

The sector is still plagued by overcapacity and poor profitability, but perhaps the biggest concern is the apparent lack of any willingness to deal with the issues.

China produced about 27.5 million tonnes of aluminium last year, according to consultants AZ China, a figure above the official 24.4 million tonnes, which AZ China says doesn’t include some privately-owned smelters.

This represents roughly half of global output, but is still some way short of China’s capacity to produce 36 million tonnes per annum. China will add as much as 3.5 million tonnes of new production this year, but not all of this will be fully utilised, AZ China said in a Jan. 9 briefing note.

With some additional capacity at existing plants, some planned closure of older smelters and the new plants, AZ China expects total Chinese aluminium output to reach 29 million tonnes in 2015, a gain of almost 5.5 percent on the 2014 figure.

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FORD MOTOR COMPANY NEWS RELEASE: WHY BARRICK GOLD CORP. HAS ORDERED 35 ALL-NEW FORD F-150S AFTER SECRETLY TESTING F-150 ALUMINUM CARGO BOXES


 

FEB 2, 2015 | DEARBORN, MICHIGAN

  • Barrick Gold USA, one of three Ford customers chosen to blindly test two prototype F-150 pickups with experimental aluminum-alloy cargo boxes, has placed an initial order for 35 all-new 2015 F-150 trucks
  • Barrick testing helped improve the all-new, high-strength, military-grade, aluminum-alloy-bodied F-150 – the toughest, smartest, most capable F-150 ever
  • Barrick accumulated more than 100,000 miles on its two F-150 test vehicles, putting the trucks through the harshest challenges daily; workers would literally throw heavy pieces of equipment into the cargo bed, including large pumps, motors and specialty tools

After helping Ford torture test prototypes of aluminum pickup truck boxes, Barrick Gold USA is placing an initial order for 35 all-new F-150s – the toughest, smartest, most capable F-150 yet.

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Alcoa Profit Tops Estimates as Autos Drive Aluminum Use – by Liezel Hill (Bloomberg News – January 12, 2015)

http://www.bloomberg.com/

Alcoa Inc. (AA), the largest U.S. aluminum producer, posted better-than-expected fourth-quarter earnings and sales as orders from the auto and aerospace industries boosted demand for the lightweight metal.

Profit excluding one-time items was 33 cents a share, the New York-based company said today in a statement, exceeding the 27-cent average of 19 estimates compiled by Bloomberg. Sales rose 14 percent to $6.38 billion, compared with the $6.05 billion average estimate. The shares rose as much as 2.4 percent in extended trading.

Alcoa shipped a record volume of automotive aluminum sheet in the quarter. Auto companies such as Ford Motor Co., which started making its lightweight, aluminum-bodied F-150 pickup in November, are using more of the metal to boost fuel efficiency. Alcoa also predicted orders of commercial and regional jets will help boost aerospace sales by as much as 10 percent this year. It said overall global aluminum demand will rise 7 percent in 2015.

“Fundamentally Alcoa continues to improve and we would continue to be buyers,” Josh Sullivan, an analyst at Stern Agee & Leach Inc. who has a buy rating, said in a note today.

The company, the first in the Standard & Poor’s 500 Index to publish fourth-quarter earnings, reported after the close of trading.

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The next pop can? How Ford’s new F-150 trucks are shaking up the aluminum industry – by Kristine Owram (National Post – November 22, 2014)

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

After several years of turmoil, the North American aluminum industry may have found its saviour in Ford Motor Co.’s new F-150 — arguably the biggest thing to happen to the metal since Coke and Pepsi ditched steel cans in 1967.

“When cans transitioned to aluminum it was the beginning of a new era for the industry,” said Gervais Jacques, chief commercial officer at Rio Tinto Alcan, which sells aluminum to General Motors Co., Honda Motor Co. and Tesla Motors Inc. “This is to the same extent.”

Like many other metals, aluminum prices plunged at the start of the financial crisis in 2008. Several aluminum makers were forced to dramatically curtail production in response to a collapse in global demand and an increase in Chinese production that they had dramatically underestimated.

Rio Tinto Group Plc, the global miner that bought Montreal-based Alcan at the height of the market in 2007, has been forced to take US$25-billion worth of writedowns on that acquisition — more than two-thirds of the US$38-billion it paid for the takeover. But aluminum’s troubles may be over, thanks to the aluminum-bodied F-150 and the potential for many other vehicles like it.

One company that sees a massive opportunity arising from the auto industry’s new taste for aluminum is American Specialty Alloys Inc.

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Ford bets it all on aluminum-bodied F-150, which heads to dealers next month – by Dee-Ann Durbin (The Associated Press/Windsor Star – November 12, 2014)

http://www.windsorstar.com/index.html

DEARBORN, Mich. – Russell Barnett, a Ford dealer in Tennessee, is ready for aluminum.

Ford is using the metal almost exclusively in body of the 2015 version of its bestselling F-150 pickup, which starts arriving at dealerships next month. Barnett is already answering customers’ questions about the truck. And he’s updated his repair shop not only for the F-150, but in anticipation that other Ford brands such as the Mustang will eventually make the switch from steel.

But, just in case, he ordered some extra steel-bodied 2014 pickups.

“There will be some people who won’t want to change for a while,” says Barnett, who says pickups make up around half of the annual sales at his dealership in rural Winchester.

Ford is doubling down on aluminum, which is lighter — and more expensive — than steel but just as tough. The new truck is the company’s response to customers’ requests for a more fuel-efficient and nimbler pickup. Ford hopes the advantages outweigh customer doubts about the durability of aluminum or potential repair costs for the pricier metal.

It’s a big risk. So far this year, one out of every three vehicles Ford sold in the U.S. was an F-Series pickup. Morgan Stanley estimates F-Series trucks account for 90 per cent of Ford’s global automotive profit.

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COLUMN-Chinese stockpiles mean bauxite may not be a sure bet – by Clyde Russell (Reuters India – October 29, 2014)

http://in.reuters.com/

LAUNCESTON, Australia, Oct 29 (Reuters) – Bauxite is one of the few natural resources to attract positive commentary amid the sharp falls in many commodities in the past few months.

Certainly the outlook appears quite constructive for the mineral used to make alumina, which in turn is the primary ingredient for aluminium.

Indonesia produced about 12 percent of the world’s output and was the top supplier to China prior to Jakarta imposing a ban on exporting raw mineral ores in January.

The Ebola outbreak in West Africa appears to have had a limited impact on shipments from Guinea, so far, but the risk of disruption rises as long as the deadly disease remains prevalent in the region.

Also, much of the planned new supply is in West Africa, including major projects in Mali, and the longer the Ebola crisis endures, the more likely delays and cost overruns become.

Throw in signs that, excluding China, aluminium demand is rising as the U.S. and other economies recover, while Chinese aluminium output remains robust, and it’s not hard to see bauxite as a shining light in the commodity firmament.

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COLUMN-Why China blurs the global aluminium picture – by Andy Home (Reuters U.S. – October 27, 2014)

http://www.reuters.com/

Oct 27 (Reuters) – Is the world aluminium market in a supply-demand deficit or surplus? It’s a simple enough question but an extraordinarily difficult one to answer.

That much was clear at last week’s LME Seminar. Two respected bank analysts, Citi’s David Wilson and Natixis’ Nic Brown, offered diametrically different views.

Deficit, according to Brown, and one that will steadily increase over the next two years. Surplus, according to Wilson, with no sign of deficit until 2017 at the earliest.

Calculating supply-demand balances in any industrial metal is a tricky business, but the problems are compounded in aluminium.

There is, for example, no aluminium equivalent to the International Study Groups that do so much of the statistical leg-work in the copper, zinc, lead and nickel markets. The International Aluminium Institute (IAI) releases monthly production figures but only for primary metal, leaving the secondary scrap component of the supply chain shrouded in statistical darkness.

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Alcoa earnings beat forecasts, propelled by higher aluminum prices – by Allison Martell and Nicole Mordant (Reuters India – October 9, 2014)

http://in.reuters.com/

REUTERS – Alcoa Inc (AA.N) reported a stronger-than-expected increase in third-quarter profit on Wednesday as higher aluminum prices and lower costs drove a recovery in its business unit that produces aluminum.

In an interview, Alcoa Chief Executive Klaus Kleinfeld said the “upstream” raw materials business had its best quarter since the 2008 economic slump. “Our performance this time is more great proof that our strategy is working,” he said.

The aluminum company traditionally has been one of the first S&P 500 companies to report quarterly results, and some see it as a bellwether for the broader U.S. economy because it supplies major industries such as auto and airplane manufacturing.

Alcoa’s stock rose 2 percent in after-hours trading to $16.42. It is up 50 percent this year, outperforming the market and aluminum prices.

In the third quarter, Alcoa’s net income rose to $149 million, or 12 cents a share, from $24 million, or 2 cents, even as it took restructuring charges for smelter closures.

Alcoa’s growing business making specialized goods for automotive and aerospace customers has helped offset a weak market for less-processed aluminum. The company has also been working to improve costs.

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[South African] Smelters need support to survive – by Mark Allix (Business Day Live – September 4, 2014)

http://www.bdlive.co.za/

SMELTERS and foundries need support if they are to survive. As a start, Eskom has to sort out its electricity supply problems, and government’s R4-trillion infrastructure plan needs to get under way soon.

Better still, the private sector should be encouraged to provide more traditionally sourced energy. BHP Billiton has turned off its Bayside aluminium smelter in KwaZulu-Natal. Smelting costs too much, even though the company has a hugely preferential electricity pricing agreement with Eskom.

Bayside, BHP Billiton’s Hillside aluminium smelter and the Mozal smelter near Maputo in Mozambique together used about 9% of South Africa’s total electricity output.

A chunk of state infrastructure funding is being spent on building new energy capacity — mainly the delayed Medupi and Kusile coal-fired power stations, but also the Ingula hydropower project in KwaZulu-Natal.

The manufacturing sector is under pressure from strikes, above-inflation wage and increases in administered price, as well as poor maintenance and development of infrastructure.

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Rio Tinto’s Kitimat aluminum smelter upgrade price tag rises to US$4.8 billion – by Ross Marowits (Canadian Business – Aug 7, 2014)

 http://www.canadianbusiness.com/

The Canadian Press – MONTREAL – Rio Tinto will pump another US$1.5 billion into the aluminum smelter upgrade at Kitimat, B.C., increasing the total project cost to US$4.8 billion, as the mining giant says it remains confident about long-term fundamentals about metal demand.

The London-based company announced Thursday that its board has approved a further $1.5 billion expenditure to complete the modernization. That’s on top of $400 million that was previously allocated but unspent.

Rio Tinto Alcan’s former CEO Jacynthe Cote had said that difficulty in finding the right workers pushed the project off schedule and over budget.

There are about 1,100 employees at Kitimat and nearly 3,000 people working on the smelter upgrade, which is expected to start metal production in the first half of 2015.

Engineering, procurement and construction is 70 per cent complete but construction is only half finished, spokesman Bryan Tucker said Thursday.

The company announced in 2011 that it would upgrade the aging Kitimat smelter, boosting its aluminum production capacity by more than 48 per cent to about 420,000 tonnes per year.

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