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Aluminium/Bauxite

RPT-COLUMN-China aluminium surplus likely to cap price rally – by Clyde Russell (Reuters India – July 22, 2014)

http://in.reuters.com/

Clyde Russell is a Reuters columnist. The views expressed are his own.

LAUNCESTON, Australia, July 22 (Reuters) – Rising Chinese output is likely to act as a brake on aluminium’s 15 percent rally since May, even as the global outlook for the industrial metal improves.

It’s no secret that much of Chinese aluminium smelting capacity operates at a loss and is reliant on subsidies from local and regional governments to survive.

But the price gain in the second quarter resulted in capacity that was either idled, or about to be shut, remaining in operation, according to a July 17 report from Beijing-based consultants AZ China.

This is despite some 80 percent of Chinese smelters, representing some 20 million tonnes of annual capacity, operating at a theoretical loss, AZ China said.

The average cash cost for a Chinese aluminium smelter in the second quarter was 14,161 yuan ($2,282) a tonne, above the Shanghai Futures Exchange (SHFE) spot price of 13,435 yuan, the report said.

Still, the average cash cost for Chinese smelters was 2 percent lower in the second quarter than the first as inputs such as electricity and alumina decreased in price, allowing plants to remain in business.

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B.C. claims privilege on Kitimat report – Wendy Stueck (Globe and Mail – July 13, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

VANCOUVER — In an ongoing tussle over the Kitimat Airshed Study, lawyers representing two women in an Environmental Appeal Board case have asked that agency to force the province to turn over the study or explain its claim of cabinet privilege.

The study, which the province commissioned last year to weigh the impact of industrial emissions on the Kitimat Airshed, has yet to be publicly released, even though some groups interested in its conclusions – including the District of Kitimat – had expected to see it before the end of June.

Now, the report is the subject of a tug-of-war between the province and appellants in the EAB case, which concerns sulphur dioxide emissions from the Rio Tinto Alcan smelter in Kitimat. The province says it received a draft of the Kitimat Airshed Report in March and that it is “now part of discussions around cleanest LNG requirements” and will be released later this year. For now, however, the government says the report is being discussed by cabinet and subject to Crown privilege.

Emily Toews and Elisabeth Stannus – the appellants in the EAB case – would like to see the report now, maintaining it would provide the most up-to-date information about industrial emissions in Kitimat.

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Alcoa pledges finished products push as results beat Wall Street – by Nicole Mordant (Reuters U.S. – July 8, 2014)

http://www.reuters.com/

(Reuters) – Alcoa Inc’s (AA.N) chief executive officer said on Tuesday the aluminum company would push deeper into the market for more profitable finished products like truck wheels and aircraft fuselages as it reported quarterly results that beat analysts’ expectations.

At the same time, CEO Klaus Kleinfeld said Alcoa was focused on cutting costs and improving the performance of its traditional commodity business, which has been hit by weaker aluminum prices.

Alcoa’s shares rose as much as 2 percent in after-hours trading. The company’s stock price is up nearly 40 percent this year.

“The transformation of Alcoa truly is in high gear and the results show this. Our strategy is working,” Kleinfeld said on a conference call.

Alcoa’s strategy to boost value-added fabricated product output and broaden its footprint in other light-weight materials like nickel, titanium and lithium has partially offset the pain of prolonged weak underlying primary aluminum prices on the London Metal Exchange CMAL3, which have been close to or below breakeven for many smelters over the past year.

Alcoa has idled or permanently closed loss-making smelting capacity as it ramps up its smelter complex in Saudi Arabia, which will be the world’s lowest-cost.

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RPT-After 125 years, Alcoa looks beyond aluminum – by Allison Martell (Reuters India – June 27, 2014)

http://in.reuters.com/

(Reuters) – Alcoa Inc, the company that helped create the aluminum industry more than a century ago, is reinventing itself as a manufacturer of specialized components for aerospace and automotive customers, including some that contain no aluminum at all.

The company’s deal for jet engine part maker Firth Rixson, which uses little aluminum, is its biggest move yet to escape the terrible primary aluminum market by crafting the parts its customers need, even if they are made of nickel or titanium.

It announced the proposed $2.85 billion deal to buy Firth Rixson earlier on Thursday. Alcoa talks constantly about expanding its downstream businesses, which sell truck wheels, aircraft parts and other goods. Now it is rebranding itself in ways that would have seemed unthinkable just a few years ago.

“We are really material-agnostic,” Chief Executive Officer Klaus Kleinfeld said in an interview on Thursday. “We love, internally, that we have fights over what is the right material, in front of our customers, together with our customers.”

From an upstart, this would be one thing. But Alcoa has been synonymous with aluminum since 1888, and it has a role in every part of the sector: mining bauxite, refining it into alumina and smelting alumina to create aluminum.

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Indonesian miners delay alumina refinery plans on legal uncertainty – by Wilda Asmarini and Yayat Supriatna (Reuters India – June 19, 2014)

http://in.reuters.com/

(Reuters) – Bauxite producers are delaying plans to build alumina refineries in Indonesia due to legal uncertainty over a mineral ore export ban imposed five months ago, government and industry officials said.

Indonesia’s Constitutional Court has yet to decide on a legal challenge against a Jan. 12 export ban on bauxite, nickel and other mineral ores imposed by the government to force miners to build refineries and processing plants.

Before the ban, Indonesian bauxite exports accounted for about 12 percent of global aluminimum production, with China taking the bulk of shipments for processing into alumina, an intermediate stage in the production of aluminium.

As many as five alumina refinery projects are underway in Indonesia, industry officials said, but the legal uncertainty means firms have slowed their construction plans for the refineries, which can cost as much as $1 billion each.

“They are worried if the court allows exports again, bauxite producers will be able to resume shipments of raw materials. Investors want the ban to remain,” Dede Suhendra, Mineral Enterprise Director at the mining ministry, told reporters.

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Aluminum industry must think beyond cars for long-term growth, says demographer – by Ross Marowits (Canadian Business Magazine – June 3, 2014)

http://www.canadianbusiness.com/

The Canadian Press – MONTREAL – A rapidly aging population means the aluminum industry needs to look beyond the high demand for lightweight cars if it wants to grow long into the future, a Canadian demographer said Tuesday.

University of Toronto economics professor David Foot told an aluminum conference that spending patterns will shift as people age, potentially impacting the long-term demand for the metal.

“When we get into our 60s and 70s, we drive our automobiles a little less, we fly a little less, so some of the current uses of aluminum which are great, are not going to be long-term growth prospects,” he said in an interview.

The aluminum sector foresees “game changing” demand from planes, trains and automobiles, which are increasingly using the metal to lower the weight and improve fuel efficiency and environmental emissions.

For instance, automaker giant Ford already plans on reducing the weight of its F-150 pickup truck by increasing the amount of aluminum used to 315 kilograms from 45 kilograms on current models.

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Rio Tinto leader Ray Ahmat cuts a trail for others – by Sarah-Jane Tasker (The Australian – May 31, 2014)

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

RAY Ahmat, the first local Aboriginal superintendent at Rio Tinto Alcan’s bauxite mine in Weipa, has outlined the opportunities to develop local talent after taking out a top award at an industry function.

Mr Ahmat received the Overall Indigenous Award at the Queensland Resources Council’s Indigenous Awards last night for his contribution as a role model in the state’s sector.

He leads a large operational team of more than 170 people at the mine, on the Western Cape of York Peninsula in Queensland, managing pre-mining and post-mining activities.

Mr Ahmat, born and bred in the region, said his parents were strong role models in his life. His father had worked at the mine for 32 years and his mother spent 28 years at the operation.

“I got to where I am to seeing what they did,” he said. Mr Ahmat, who is a Yupungathi traditional owner, joined the miner 15 years ago as a truck driver before moving up the chain to superintendent — a path he hopes he can encourage others in his community to follow.

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Jacynthe Côté exiting as head of Rio Tinto’s aluminum unit – by Bertrand Marotte (Globe and Mail – May 28, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

MONTREAL — Jacynthe Côté, Rio Tinto Ltd.’s head of aluminum operations, is stepping down. The Anglo-Australian global mining giant said on Tuesday that Ms. Côté is leaving Montreal-based Rio Tinto Alcan “for personal reasons to pursue other interests.”

She is being replaced by BP PLC veteran Alfredo Barrios, 48, the executive director and executive vice-president (downstream) at joint venture TNK-BP, one of Russia’s largest vertically integrated oil and gas companies. Ms. Côté was promoted to the job in 2009, two years after her predecessor – Richard Evans – presided over the huge $38-billion takeover of Alcan Inc. by Rio Tinto.

“Jacynthe has long been a key member of Rio Tinto’s leadership team and has enjoyed a successful career with Rio Tinto and Alcan spanning more than 25 years,” said Rio Tinto chief executive Sam Walsh.

“The ongoing improvement in the performance of the Aluminium business is testimony to her commitment to the business throughout her career.” Under Ms. Côté’s watch, aluminum prices fell dramatically, forcing significant cost-cutting measures and job cuts at head office and elsewhere.

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Côté’s exit leaves Rio Tinto at crossroads – by Sophie Cousineau (Globe and Mail – May 28, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

It is a bittersweet end to Jacynthe Côté’s distinguished 26-year career at Rio Tinto Alcan.

The Laval University-trained chemist who rose through the ranks at Alcan became head of Rio Tinto’s aluminium business in January, 2009, just as the financial crisis was ripping through the world economy. No other woman had accomplished such a feat in the company’s 112-year history.

On the day she was appointed, though, she announced the closing of the Beauharnois, Que., smelter she once directed, and that pretty much set the tone for her five-year term. As aluminium prices fell and Rio Tinto suffered from an acute case of buyer’s remorse over its $38.1-billion (U.S.) acquisition of Alcan – in cash no less – Ms. Côté closed smelters, laid off employees and turned every rock she set her eyes on to cut the producer’s costs.

Last year, the unit’s underlying earnings, at $557-million, were 10 times higher than in 2012. Now that the worst of the mining downturn appears behind Rio Tinto, Ms. Côté is leaving the company’s aluminium unit to “pursue other interests.” However, her replacement by BP veteran Alfredo Barrios as chief executive comes at a time when Alcan’s future within Rio Tinto is clouded.

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Nickel, aluminium show signs of revival – by Peter Ker (Sydney Morning Herald – May 16, 2014)

http://www.smh.com.au/

They’ve been the dregs at the bottom of the diversified miners’ bottle for years, but nickel and aluminium are starting to show signs of life.

The two commodities have been bywords for poor performance over recent years, having dealt financial losses and multi-billion dollar impairments on their hapless owners at the big end of the mining industry.

But evolving attitudes in the developing world seem to be changing the rules of engagement in both industries, and tempting investors to think again. The nickel resurgence is more advanced and better understood.

Prices for the metal – used to create stainless steel – soared 56 per cent after January 10 when the Indonesian government placed a ban on certain raw metal exports.

The decision was designed to create jobs by forcing exporters to build processing plants on Indonesian soil, rather than exporting their raw ores overseas. As the world’s biggest nickel exporter, Indonesia’s removal from global trade has led to expectations of a shortage and price rises.

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Aluminium’s day dawns as iron ore dims – by Matt Chambers (The Australian – May 12, 2014)

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

Tinto’s much-maligned aluminium business could be a surprise saving grace for the miner as iron ore prices soften, with the company’s cost-cutting drive set to produce strong cashflows and boost the chance of big returns to shareholders.

The turnaround in aluminium, which Deutsche Bank is forecasting will contribute $US2 billion ($2.1bn) of annual free cashflow to Rio by 2017, comes as chief executive Sam Walsh predicts an end to the Chinese overcapacity that has hobbled the industry in recent years.

While there is no hope of recovering the $US25bn of value wiped from the aluminium unit’s book value since Rio paid $US40bn in cash for Alcan just before the global financial crisis, some investors are positioning themselves for a rebound.

“We have shareholders on our portfolio because they ­believe our aluminium business is going to be very prospective,” Mr Walsh told the company’s annual meeting in Melbourne last week. “That’s their call, but it is an indication that people ­expect there will be improvement in the business.”

Deutsche Bank analysts also sense a change.

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Vedanta shelves Odisha bauxite plan pending local approval – by Karen Rebelo (Reuters India – May 9, 2014)

http://in.reuters.com/

REUTERS – Vedanta Resources Plc said on Friday it would not mine bauxite at a controversial project in Odisha until it can win over local communities opposed to its plan.

The Environment Ministry had already rejected Vedanta’s request to mine in the Niyamgiri hills of Odisha following persistent protests from local communities that consider the region sacred..

While Vedanta stopped short of saying it had abandoned the project, its decision to await the consent of local communities will require it to look elsewhere for the raw material to feed its alumina refinery in the same state.

Analysts said Vedanta’s announcement is an early hint of plans by Tom Albanese, the former Rio Tinto head who became Vedanta’s chief executive last month, to make the London-listed company a more attractive sell to international investors.

Vedanta, a company with a market capitalisation of $4.2 billion and base metal mines in several countries, relies on aluminium production – exclusively in India – for about 12 percent of its revenue.

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Bauxite: Will Australia fill Indonesia’s shoes? – by Oliver Probert (Australian Journal of Mining – May 07, 2014)

http://www.theajmonline.com.au/

Indonesia’s move to ban the export of mineral ores has left analyst Wood Mackenzie asking the question: where will China look to satisfy its growing appetite for bauxite?

The analyst’s most recent forecasts indicate that global alumina refinery production will rise to almost 140mt by 2018, which means we’ll see bauxite demand rise by almost 80mt to 350mt. China is the main global player in the aluminium market. It represents 40% of global supply, and 60% of global demand for the metal.

With China’s alumina refinery production forecast to rise by almost 17mtpa by 2018 and a further 40mt by 2030, Wood Mackenzie estimates the Asian giant will consume as much as 240mt of bauxite by 2030.

Until recently, Indonesia was the main supplier of bauxite to China, accounting for around 65% of overall supply last year. But in an attempt to create jobs by encouraging producers to build refineries on mainland Indonesia, the government enforced a ban on mineral ore exports in January.

The ban has created a significant supply gap for China to fill, and while swollen stockpiles and source diversification will soften the blow in the short to medium term, Wood Mackenzie believes the ban could be transformative to the global bauxite market in the longer term.

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Patchy Power Challenges Indonesia Minerals Goal: Southeast Asia – by Fitri Wulandari and Eko Listiyorini (Bloomberg News – May 07, 2014)

http://www.businessweek.com/

The challenge of supplying power across an archipelago of more than 17,000 islands is complicating Indonesia’s goal of getting more out of its scattered mineral resources.

While almost 80 percent of Indonesia’s electricity capacity is in the islands of Java and Bali, the majority of its most abundant minerals such as bauxite and nickel are found in provinces including Sulawesi, Halmahera and Kalimantan. That’s testing PT Perusahaan Listrik Negara, the state utility, which received requests from 25 companies to supply new mineral-processing plants with power as of last month.

“The problem is smelters are often located in remote areas where power stations and infrastructure are lacking,” Jarman, the director general of electricity at the energy and mineral ministry, said in an interview in Jakarta.

Indonesia, the biggest producer of mined nickel, banned mineral ore exports in January to boost investment in the smelters and refineries needed to process raw materials locally into higher-value commodities. By 2030, the plants needed to turn the nation’s ore into metals will require additional power equivalent to 13 percent of current capacity, putting a strain on the electricity network in Southeast Asia’s largest economy.

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Indonesia’s gamble on ore export ban starts to hit home – by Ben Bland (Financial Times – May 7, 2014)

http://www.ft.com/home/us

Ketapang, West Kalimantan – Two hundred huge hauling trucks used to hurtle down the 34km dirt road from Harita’s Air Upas mine to its river port every day, shipping bauxite for China’s resource-hungry aluminium industry.

But work at the sprawling site in Ketapang, West Kalimantan, and dozens like it across Indonesia ground to a halt in January after the government defied lobbying from this powerful industry by implementing a long-planned ban on the export of unprocessed

The move is designed to promote investment in costly domestic processing facilities, but critics, such as the World Bank, say it has damaged investor confidence and is threatening the state finances.

Economic growth fell to its slowest pace in five years in the first quarter as tens of thousands of workers were made redundant and mineral exports, which reached $11bn last year, were halted.

Harita, a family-owned conglomerate, and its contractors laid off nearly 5,000 workers in this poor, remote region where mining has been a key driver of employment since much of the remaining rainforest was obliterated by illegal logging a decade ago.

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