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State recommends Potangi
mine site for Nalco |
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The state government of Orissa has recommended the grant of mining lease for Potangi bauxite reserve in Koraput district in favour of the public sector National Aluminium Company Ltd (Nalco). Potangi is estimated to have bauxite reserves of over 70 million tonnes. However, the company would get final approval for mining lease after obtaining the prior approval of the Union government and subject to the company obtaining all the statutory clearances. According to Ashok Dalwai, secretary, steel and mines, Orissa government, the Orissa government has approved the grant of mining lease in favour of Nalco. The recommendation in this regard has been sent to the Union government, Dalwai said. The state government has put some conditions for the public sector aluminium major before recommending Nalco's case for grant of mining lease. The company has been asked to spend 5 percent of its net profit or Rs 10 crore, whichever is higher, on peripheral development. A Special Purpose Vehicle (SPV) would be formed for this purpose in line with the one formed by Vedanta Aluminium Ltd (VAL) at Lanjigarh. Though the details of the modalities for formation of the SPV have not been worked out, the Revenue Divisional Commissioner (RDC) is likely to be the chairman of the proposed SPV. The mining lease would be given over an area of 1738.04 hectares and the company would be allowed to undertake mining outright as the area is part of the eastern bauxite belt which has been prospected. After consultation with the Orissa government, the Union Ministry of Mines had reserved the area for mining by Nalco. The grant of mining lease comes as a booster to the Navratna company planning ambitious expansion plans to enhance the capacity of its refinery and smelter. Nalco had applied for bauxite mining lease over an area of 2618 hectares in August 1992. Subsequently, the ministry of mines reserved 1738.04 hectares for the company in April 2007. Since then the proposal was pending with the state government for grant of mining lease. |
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Vedanta raises funds for
Orissa project |
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Anil Agarwal-promoted Vedanta Resources' subsidiary Vedanta Aluminium has raised a Rs 17,000-crore debt for its ongoing project in Orissa to increase its fully-integrated aluminium smelting capacity. According to sources, State Bank of India (SBI) alone lent Rs 3,000 crore for the project, reports said. SBI Capital Markets was the lead arranger for the transaction, in which around 10 banks participated. This is one of the largest loan syndications done under project finance in recent times. Vedanta Aluminium has a Rs 36,000-crore investment plan to increase its fully integrated aluminium smelting capacity to nearly 2.6 million tonnes per annum (mtpa) by 2012. Upon completion, the company is expected to become Asia's largest integrated producer of aluminium. It will also become one of the top five producers worldwide. The company is expected to commission the second phase of a 500,000 tonne-per-annum aluminium smelter, with a 1,215-Mw captive power plant, at Jharsuguda in Orissa by the end of the current financial year. Earlier, it commissioned a 1.4-mtpa greenfield alumina refinery project and an associate 90-Mw captive power plant at Lanjigarh in Orissa in 2007. Vedanta Resources also has its aluminum business under Bharat Aluminum Company (Balco) and Madras Aluminium Company (Malco). Group company Sterlite Industries acquired a controlling stake of 51 per cent in Balco from the Union government in March 2001. The company is in arbitration talks with the government for the buy-out of the residual government stake in the company. Malco is another such company that was taken over by the group in 1995. The group had planned its primary expansion for the base metal under Vedanta Aluminum, in which the group holding company has 70.5 per cent stake and its subsidiary, Sterlite Industries, owns the remainder 29.5 per cent. |
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Russia's Urals Mining
estimate higher output |
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Urals Mining and Metals Co (UMMC) of Russia expects this year's refined copper output to reach 356,918 tonnes, up 8 percent from 2009. The company said in its newsletter that 2009 refined copper output totaled 330,129 tonnes. UMMC proposes to invest more than 2 billion roubles (US$67.1 million) in new equipment this year as part of a US$130 million project to raise annual copper output to 500,000 tonnes between 2012 and 2014. It is Russia's second-largest copper producer after Norilsk Nickel. Its 2009 acquisition, together with the Russian Copper Company, of a controlling stake in Chelyabinsk Zinc also makes it the country's top zinc producer. |
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Aditya Birla Group to set up Rs 1,000-cr
aluminium downstream project |
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The Aditya Birla Group (ABG) has proposed to set up a Rs 1000 crore aluminium downstream project near its existing smelter at Hirakud of rolling mill to manufacture high quality aluminium flat rolled products (FRP) and cans. The project, to be put up by Hindalco Industries, a group company has already obtained clearance from the State Level Single Window Clearance Authority (SLSWCA) which now awaits the approval of the High Level Clearance Authority (HLCA) of the Orissa government, reports said. The Aditya Birla Group (ABG) chairman, Kumar Mangalam Birla recently called on chief minister Naveen Patnaik to discuss on the group's various projects in Orissa. Sources said that the issue of setting up of this downstream unit along with the expansion of proposed smelter capacity of Aditya Aluminium at Sambalpur from 0.26 million tonne per annum (mtpa) to 0.36 mtpa figured in the discussion with the chief minister. Emerging from the meeting, Birla said, emphasis will be given to completion of the group's existing projects in Orissa while pursuing a new downstream investment plan at Hirakud. The company's existing projects included setting up of an alumina refinery at Rayagada by group company, Utkal Alumina and a smelter-cum-power complex at Samablapur by Adityal Aluminium. Birla said, the company is not facing any problem at Raygada and the company is happy about the support provided by the state government and investment made by it in the state. On signing of concession agreement with the Orissa government for the captive port project at Chudamani, he said, it is a matter of process and this is being followed. Similarly, the company is working on the expansion of its smelter capacity and work is going on the ground. The state officials said, an environmental carrying capacity study is being done by the Nagpur-based National Environmental Engineering Research Institute (NEERI) for Sambalpur-Jharsuguda region. Once the report is received, the government would consider the company's proposal to expand the capacity of the smelter. |
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Hindustan Construction
wins Hindalco orders |
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Hindustan Construction Co Ltd said that it has won two orders worth about 3 billion rupees from Hindalco Industries for structural work at the latter's aluminium smelter project in Orissa. The first project worth about 1 billion rupees will be completed in 19 months from the date of issue of the order. The second project worth Rs 199 crore will be completed in 15 months from the date of issue. |
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South Korea buys 3,000
tonnes aluminium ingot |
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South Korea has bought 3,000 tonnes of non-western aluminium ingot for March-April shipping via tender. Local trading company Hanwha Corp has agreed to supply the metal for April 30 arrival to the port of Incheon at a premium of US$94 per tonne over London Metal Exchange cash prices on a cost, insurance and freight (CIF) basis, the procurement agency said. The purchase came after the agency secured 3,000 tonnes of western aluminium for the same shipment period at a US$117-per-tonne premium over LME cash prices, cost, insurance and freight. |
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With almost all expansion projects of aluminium majors are expected to come on stream by 2013, India will have over 2 million tonnes of exportable surplus of the metal used in power, construction and housing. Today, the country enjoys with a marginal surplus due to lower per capita consumption in the country which is hovering around 1 kg as against over 30 kgs in developed countries. India's aluminium production will more than treble to 4.4 million tonnes by mid-2012 with new capacities coming on stream, along with requisite captive power generation capacities. Hindalco's current capacity of 4.88 lakh tones is expected to surge to 11.38 lakh tonnes while Nalco's 4.03 lakh tonnes of capacity will rise to 10 lakh tonnes. On Vedanta Resources' all projects become operational by 2013, the group's total aluminium output will go up to 20 lakh tonnes from the current 6.38 lakh tonnes. Small players' 2 lakh tonnes output will go up to 3 lakh tonnes. Vedanta, Hindalco and Nalco together produced 1.5 million tonnes of the metal for the year ended March 31, 2009, a growth of 9 percent year-on-year. Though higher cost capacities were shut down (in Vedanta's subsidiaries Balco, Malco and Vedanta Aluminium) to the extent of 0.14 million tonnes, additional capacities from Vedanta Aluminium Ltd in Orissa, along with incremental capacity expansions at Nalco and Hindalco compensated for the loss. For eight months between April and November 2009, total aluminium produced was 0.98 million tonnes, a rise of 16.6 per cent over the corresponding period in the previous year. Although demand outlook for aluminium is likely to grow in line with the economy, supply is estimated to grow far in excess of demand, resulting in overcapacity in the domestic market over 2011-2013. Large power and housing projects, which use aluminium extensively, depend largely on growth in economy and, thus, spur consumption of the metal. With sharp increase in capacity over 2010-13, India will start massive export of aluminium. The country could by 2013 be an annual exporter of 2 million tonnes of the metal, assuming the planned capacity expansions become operational as currently envisaged. The current demand-supply situation for aluminium was largely balanced with consumption in line with existing production, and a relatively small volume of exports. The industry is exploring new application areas and untapped demand potential, which may result in greater preference for aluminium in the future. The expansion projects are subject to execution risk given their scale, greenfield nature, and regulatory risks with regard to mining approvals. These could delay some of the projects, or postpone indefinitely. However, the risks are partly offset by the fact that the new capacity would have low, globally competitive costs once operational. The surplus production would be exported. |
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Nalco exports 1800 tons
aluminium billets |
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The country's state-run National Aluminium Co Ltd (Nalco) sold 1,800 tons of aluminium billets at US$130 per ton premium over the average LME cash price on a cost and freight Singapore basis, a company source said.
Nalco exported billets for the first time in a decade with the aim of expanding its presence in the global market. The buyer was British metals trader LN Metals, the source, who is close to the tendering process but cannot be named due to company policy, said.
Nalco, the tenders of which serve as an international benchmark for prices, will supply the billets in six batches of 300 tons each from March to August, the source added. |
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Akai Energy to corner
7 percent market share |
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Akai Energy India Ltd, the energy arm of Akai, expects to corner a 7 per cent share of the Rs 1800 crore market for batteries in the country. Akai launched energy products in Gujarat in February, reports said. Akai batteries are known worldwide for the wide range of products and have one of the highest numbers of stock keeping units (SKUs) among battery brands. Akai batteries will be sold through multi-brand retail outlets and channel partners. The company has already signed on 1,200 channel partners across nine states including Gujarat in the country during their first phase of the launch. In order to produce the eco-friendly batteries, Akai uses NIMH (Nickel Metal Hydrate) technology and does not include Mercury or Cadmium, unlike the regular NICD (Nickel Cadmium) in rechargeable and ready-to-use batteries. Akai Batteries are particularly suited for high drain equipments like digital camera, I-pod, walkman, remote, toys, to name a few. In India, Akai Energy entered the market with an initial array of more than 33 different designs. The batteries available now include zinc chloride, alkaline, rechargeable and ready-to-use batteries. These batteries will suit both Akai products as well as other electronic appliances. To complement the range of batteries, Akai also launched battery chargers. The range of chargers includes the 'Refresher Technology Chargers' meant for professional photographers and cameramen. |
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Brook Hunt forecasts a
global zinc surplus |
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Metal research firm Brook Hunt estimates global zinc production will outpace use by 1 million tonnes this year as demand in China grows at a modest rate, reports said. Global consumption will rise 6 percent this year, after a “big drop” of 9 percent in 2009. The industry had a 1 million tonne production surplus last year. China didn't 'escape unscathed' from the worst financial crisis since the great depression. Demand growth in the Asian country 'will be relatively modest, at 9 to 10 percent,' over the next few years. Zinc, used in making stainless steel, has dropped 12 percent this year on the London Metal Exchange as inventories climbed. If miners don't 'exercise discipline' and curb output, 'it will set the scene for four or five years of low, unattractive zinc prices of US$1,600 to US$1,800 per tonne,” an analyst said. If producers cut output to eliminate the surplus, very good prices will emerge around 2013, he said. |
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Alcoa not to halt operations |
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Aluminium major Alcoa would not halt operations at its two Italian plants for the next six months while it awaited an EU decision over the reimbursement of energy subsidies.
"Alcoa will continue to operate the Italian plants for a period of up to six months, awaiting a final decision by the European Commission" on the legality of an Italian government decree that has subsidized the price of energy, the company said in a statement.
In November Alcoa said it would temporarily shut down its Sardinian Portovesme and northern Fusina smeltering plants after the European Commission told the company it would have to repay the US$400 to 540 million, it has received in state aid from Italy since 2006. |
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Peru production decreases |
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Peru's copper, zinc and silver production decreased in January over the same period of 2009, while it's gold output increased YoY, according to a data from Peru's Ministry of Mines.
Data indicated that Peru produced 101,826 tons of copper in January down 4.7 percent YoY; 124,621 tons of zinc down 8.9 percent YoY; 15,803,036 grams of gold up 14 percent YoY; 295,968 kilogram of silver down by 2.7 percent YoY; 23,248 tons of lead decrease of 15 percent YoY; 442,976 tons of iron a rise of 32 percent YoY; and 3,037 tons of tin a decline of 3.1 percent YoY. |
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Mines ministry not to dilute
govt stake in Nalco |
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The Mines Ministry has shot down a plan to dilute government stake in National Aluminium Company (Nalco) saying the company doesn't need any funds at present, while accepting a proposal to divest 10 percent stake in Hindustan Copper.
The Disinvestment Department is expected to approach the Cabinet Committee on Economic Affairs (CCEA) in few days to seek approval for divesting 10 percent equity in Hindustan Copper along with a 10 percent fresh equity issue by the miner. The government currently holds 99.59 percent in Hindustan Copper and could earn over Rs 5,000 crore from the sale. On Nalco, the Mines Ministry has, in a letter to the Department of Disinvestment, opposed selloff.. “It is not feasible to go in for further disinvestment in NALCO as the company does not require any funds till 2013,” the letter said.
This is flawed reasoning as in a divestment of stake by the government the money will go to the exchequer and not the company. Also, divestment of shares by the government merely changes the ownership; it does not alter the capital structure of the company. The Disinvestment Department, which has identified about 60 public sector enterprises (PSUs) for listing on the bourses, is at present finalising the disinvestment roadmap for the new fiscal. The government has targeted to raise Rs 40,000 crore in 2010-11 through stake sale in companies run by it. It plans to sell shares in 12 PSUs.
Proceeds from divestment are key to the government's effort to bring down fiscal deficit to 5.5 percent of the GDP next financial year from 6.7 percent in the current year. The government has already divested about 13 percent of its stake in Nalco. It was looking at the possibility of reviving an earlier proposal to divest another 10 percent of its stake through a follow on public offer.
It had mooted a similar proposal in 2006, which was cleared by the Cabinet Committee on Economic Affairs. But following the protest over disinvestment in Neyveli Lignite Corporation, the UPA government put all its divestment plans, including that for Nalco in cold storage. Both the mining companies are looking at significant capital expenditure in the coming years. For 2010-11, Hindustan Copper has doubled its capex to Rs 150 crore, while Nalco will spend Rs 1,389 crore for its several long-term expansion programmes, according to the Budget document. |
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Rio Tinto covers massive
debt with Alcan sale |
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Mining giant Rio Tinto has sold off US$10 billion worth of assets. With Rio Tinto's launching of a divestment programme in 2008 to cover its massive debt, the company has now completed the sale of its Alcan Packaging Food Americas division.
The US$1.2 billion sale to America's Bemis Company takes Rio's total divestments to US$10.3 billion since 2008. Rio has said the recapitalisation should leave the company well placed to consider other mining investment opportunities as they emerge.
Rio said it was buying 15 million new shares in Canada's Ivanhoe Mines. |
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Kazakhmys earnings
beat estimates |
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Kazakhmys Plc, Kazakhstan's biggest copper miner, posted higher-than-expected 2009 earnings and reinstated a full-year dividend after production costs fell, reports said. Earnings before interest, tax, depreciation and amortization slid to US$1.21 billion from US$1.63 billion, London-based Kazakhmys said.
The earnings, which don't include one-time charges and income from the company's stake in Eurasian Natural Resources Corp., exceeded analysts' estimates of US$1.14 billion. Sales fell 29 percent to US$3.68 billion. So-called unit costs declined to 72 cents a pound of copper, from 116 cents. The company will pay a full-year dividend of 9 cents a share. The EBIDTA beat was principally due to lower cash costs in the copper division, the company said in a report. Kazakhmys, which sells most of its copper output to China and Europe, has raised US$2.7 billion for projects including its Boschekul plant as demand recovers along with the world economy.
The plant will be able to produce 100,000 tons of copper ore concentrate a year, or about a third of its production. The costs may rise to between 90 cents and 120 cents per pound in 2010 because of inflation in Kazakhstan. The company, which spent US$428 million last year, plans to increase capital expenditure to as much as US$700 million in 2010. Kazakhmys will use about US$300 million to maintain current businesses and the rest on growth projects. The company has signed contracts to sell 90 percent of its 2010 output. Sales fell after Kazakhmys sold its copper for US$5,024 a ton through the year, from US$6,714 a year earlier. Copper cathode output was 320,000 tons in 2009, the company said, after producing 378,100 tons a year earlier. |
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Aurubis sets ambitious earning target |
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Aurubis, Europe's largest copper smelter, is likely to post a significant improvement in operating profit in the financial year ending September, reports said. It is too ambitious, however, to apply the company's better-than-expected first quarter performance to the full year. Because of volatility, especially in the copper market, a multiplication of the (first quarter) results onto the financial year seems ambitious. But the operating result is likely to significantly rise compared to the results last year, an analyst said.
In February, Aurubis posted higher-than-expected operating profit for its first quarter and said profits this year should rise significantly. For the year to September 2009, its operating profit declined by 70 percent to 111 million euros, and the company plans to pay a dividend of 0.65 euros per share. The expectation of better results was based on positive developments in copper production and sulphuric acid markets and continued good profit margins in the recycling business. The analyst further commented that swings in copper prices could have an unforeseeable impact on inventory values. In the medium-term the significant rise in copper demand and improvements in treatment and refining charges (TC/RCs) are expected for copper concentrate. TC/RCs are fees paid by copper mines to refine copper concentrate into metal. The impact of an earthquake that hit Chile on the country's copper industry was still unclear, although some mines may be hit by power cuts. Forecasts for 2010 global economic growth were more positive and global demand for copper was 'seen overall as positive'. |
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Nalco draws up Rs 50,000-crore expansion plans |
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Public sector aluminium major Nalco has laid out a Rs 50,000-crore expansion plan spread over the next 8-9 years. "We have taken up the third phase expansion project to increase capacity. The expansion will be completed in 8-9 years involving a capital outlay of Rs 50,000 crore.
“In FY11, the company will spend Rs 1,500 crore towards capex," Nalco CMD A K Shrivastava said. National Aluminium Company Ltd plans to increase its capacity from 4.6 lakh mt to 5.75 lakh mt, alumina refinery strength from 21 lakh mt to 29 lakh mt and de-bottlenecking of alumina from 21 lakh mt to 22.7 lakh mt.
"We have no fund raising plans for the next two years as we have enough resources. But after that, we would require to raise funds," Shrivastava said, adding that the company has no plans for a follow-on public offer in the near future.
The company plans to set up a Rs 16,000 crore greenfield project at Jharsuguda in Orissa and a Rs 5,600 crore alumina refinery at Visakhapatnam in Andhra Pradesh. It is also planning to increase its overseas footprint. |
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Jiangxi Copper output to
hit 900,000 tons |
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Jiangxi Copper Co Ltd, the largest integrated copper producer in mainland China, said that its refined copper output is expected to reach 900,000 tons this year.
Jiangxi Copper is also seeking potential acquisition opportunities of high-grade copper mines in Zambia, Congo, and other African countries, said the firm's chairman Li Yihuang.
Li noted that copper concentrate supplies will remain tight in 2010, and copper prices will continue to rise in the first half of this year.
Jiangxi Copper is in talks with Yantai Penghui Copper Co Ltd to buy the latter, and the two companies have inked an initial cooperation framework agreement. The sale is subject to approval from the State-owned Assets Supervision and Administration Commission, China Knowledge reported earlier.
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RUSAL eyes major Chinese
aluminum deals |
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UC RUSAL, the world's largest aluminum producer, plans to secure between five and eight major Chinese buyers on long-term contracts to carve a larger share of the world's biggest market for the metal.
UC RUSAL, fresh from Russia's biggest-ever private sector debt restructuring, also plans to restart 100,000 tons of idle capacity by the end of the first quarter as global consumption enters the second phase of recovery, a senior official said.
"Large Chinese companies represent a very interesting customer segment, and that is where we would like to focus our efforts," Artyom Volynets, RUSAL's deputy chief executive for strategy, said at the Reuters Global Mining and Steel Summit.
UC RUSAL, whose largest shareholder is Russian billionaire Oleg Deripaska, is seeking a bigger share of a Chinese market where per capita aluminum consumption has doubled to 10 kg a year in the last five years, versus 20-25 kg in western Europe.
The company struck a deal in November to sell 1.68 million tons of aluminum to Chinese state conglomerate NORINCO over seven years.
"We are in discussions with several similar-sized corporations, which will hopefully be buying from us at the same levels," Volynets said and further commented that the goal is to sign five to eight similar customers over the next three to five years.
Demand for aluminum, used in transport, construction and packaging, was rising as the global economy enters its second wave of recovery.
In China, demand could rise about 20 percent this year from the 15 million tons consumed in 2009. India, with annual per capita consumption of 1.8 kg, was also a growth market, he said.
UC RUSAL has capacity to produce 4.6 million tons a year of aluminum and produced about 3.9 million last year. About 100,000 tons of idle capacity, in Siberia, Sweden and Nigeria, would be operational by the end of the first quarter, he said.
"The other 500,000 tons can also be added. It is also profitable at today's aluminum prices, but we are not in a hurry to do that," he mentioned and further said said that We'll review plans for this idle capacity every quarter.
Though aluminum stocks in London Metal Exchange warehouses are near record highs in excess of 4.5 million tons, Volynets said supply was tighter than it might appear.
"A very significant proportion of those inventories are still locked into long-term financial deals: 60 or 70 percent," he said. "These were two- to three-year deals, so they are not yet up for renewal. It's inventories in Asia that matter for the global market,” he noted and said that in Japanese ports, in South Korean ports, they are done to a single day's consumption and that has pushed up premiums.
Volynets said RUSAL sold approximately 10 percent of its annual output to Glencore, the commodity trading giant that owns a stake in the Russian aluminum firm. "In a typical year, we sell roughly 10 percent to them," he said.
"Having them as a shareholder gives us a very interesting insight beyond aluminum ... It helps us to understand the bigger picture."
RUSAL, which raised over US$2 billion in a Hong Kong share float in January, could potentially consider issuing convertible bonds at the suggestion of investors during the IPO roadshow.
Volynets stressed that the issue had not been discussed and that the company had no immediate need to convert or attract loans as it had agreed the terms of its debt
“Unless you are in oil or, to a lesser extent, steel, you cannot build a big balance sheet on one commodity ... If you want to compete on a global scale, that's the type of company one needs to be thinking of building." |
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Gold production rises
in Australia |
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According to the latest report by the Mining consultants Surbiton Associates, the output of total gold in Australia grew by 13 percent in the quarter ending December comparing to the previous quarter. Also the demand of gold was reported increased in the quarter reflecting the increase in gold prices.
According to the report, the total gold production in the quarter ended December was reported 62 tons or 2 million ounces, increasing by 14 percent comparing to the same period last year.
For the full year 2009, the total gold output was reported 227 tons or 7.3 million ounces, increasing by 3 percent comparing to year 2008. Also last year's output would be worth more than $9 billion valued at the current Australian gold price of $1250 an ounce.
The yearly gold output put Australia to the position of the world's second largest gold producing country. Australia is now only behind China which produced 314 tons gold last year. However, US and South Africa are the countries with third and fourth rank in the list.
According to the Surbiton Associates, gold production is also expected to increase in the near future.
"Despite the low level of exploration, which is still a real cause for concern in the longer term, the current attractive gold price and margins are fostering the redevelopment of old operations," said Sandra Close, Surbiton Associates managing director. |
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Novelis sees aluminum
demand rising |
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Novelis Inc., the US-based aluminum unit of India's Hindalco Industries Ltd., sees global demand for the industrial metal rising about 4 percent annually in the next five years, President Philip Martens said.
The strongest growth, of about 6 percent to 10 percent annually, will come from Asia, followed by 7 percent to 8 percent increases in South America, Martens said.
North American demand may increase 1 percent to 3 percent annually, followed by Europe, which will see gains of 1 percent or less.
“We're beginning to see an increase in demand in what we call industrial products, it's really electronic consumer durables,” Martens commented.
“Anything that requires an aluminum carrier for stability, light weight and other factors, we do see demand primarily coming out of Asia. Most of the products are produced there and shipped worldwide.”
Novelis is seeing the strongest demand growth for metal used in products such as flat-screen televisions, laptop computers, gaming stations, cell phones and cameras. Aluminum for delivery in three months has increased 72 percent in the past year to US$2,231 a ton on the London Metal Exchange, driven by demand from China.
Hindalco, India's largest aluminum maker, acquired Novelis in 2007 for US$6 billion, two years after it was spun off by Canada's Alcan Inc. in 2005. Novelis had US$10.2 billion in sales last year, 52 percent of which came from sales of aluminum used for beverage cans. Novelis has 12,000 employees in 11 countries.
The growth in global aluminum demand should be adequate to absorb the large inventories monitored by the LME without depressing prices, Martens said. Aluminum inventory now monitored by the exchange is 4.54 million tons. “There is still quite a bit of inventory there,” Martens said. “I think the people who own the inventory are going to be smart and will meter it out over time as demand starts to pick up. Nobody is going to rush to dump inventory on the market.”
According to a report, Kevin Norrish of Barclays Capital said there would be no material growth in copper supply this year. He projected copper supply growth at 7 percent, but various disruptions to production would keep supply in check. Norrish said he was bullish that the copper price would hit highs of $8,500 per ton in 2012 owing to supply constraints. "If we are going to see a surpirise this year, the surprise is going to come from demand... indicators are pointing to a stronger OECD demand rebound," he said.
Copper MCU3 fell to a two-and-a-half month low on Monday, as strong economic data heightened investor concerns that China, the world's top metals consumer, may further tighten monetary policy. |
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Aluminum producers cut fee |
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Aluminum producers cut the fee they charge Japanese buyers for the first time in a year as supply in Asia increased after Middle Eastern smelters began production and China restarted idled capacity.
Premiums for the three months ending June 30 have been set at US$122 a metric ton over the London cash price in transactions agreed so far, down from US$125 to US$130 this quarter, said three executives involved in the negotiations. The fee had climbed to the highest level in at least 14 years.
Aluminum is little changed this year, after rallying 45 percent in 2009, as demand from industrialized nations is slow to recover and supply from new projects becomes available, leading to a global surplus. China, the biggest consumer of the metal used in cars and houses, cut purchases after record imports last year as local smelters resumed production.
“Aluminum stockpiles in China are ample after the nation bought more metal than necessary in anticipation of a demand recovery,” said Naoki Mita, manager at Barclays Capital Japan Ltd. Given a slowdown in Chinese imports and increasing output in the Middle East, the market will be oversupplied in the second quarter.
China’s imports of refined aluminum fell to 40,059 tons in January from 42,106 tons in December and 57,565 tons in November. Full-year imports surged to 1.5 million tons as the country’s stockpiling agency bought more than 500,000 tons to support domestic smelters and the government’s US$586 billion stimulus package boosted purchases.
Aluminum smelters in China, the largest producer, restarted as much as 5 million tons per annum of idled capacity in 2009 as profit margins improved with rising prices, according to a report from Macquarie Group Ltd.
Supply to Asia rose as Norsk Hydro ASA’s Qatalum smelter in Qatar started output in December. The plant will be in full production in October.
Emirates Aluminium Co (Emal) ., a joint venture between Abu Dhabi state-owned investment company Mubadala and Dubai Aluminium Co., started production on Dec. 1. Emal, as the venture is called, said its first output was supplied to a local client in February.
Emal agreed to supply the metal to South Korea’s Daewoo International Corp. Initial capacity of the smelter will reach 700,000 tons annually by the end of this year.
Japanese buyers pay a fee in addition to the LME cash price to reflect local supply and demand and to include freight and insurance. Some deals for the second quarter are still being negotiated with offers at US$124 or above.
The premium, applied to so-called Good Western-grade aluminum ingot, more than doubled in the past year as lower shipments from Russia and record purchases by China reduced the metal availability in Asia. The fee climbed in the three months to March 31 for a third straight quarter, adding to costs for Japanese fabricators such as Furukawa-Sky Aluminum Corp. and Kobe Steel Ltd. |
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Rio Tinto Alcan's upgrade to
increase efficiency |
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A proposed US$50 million upgrade at Rio Tinto Alcan’s Sebree aluminum smelter would increase its efficiency and improve productivity, helping keep the 500-employee plant viable for years to come, company officials said.
That’s significant considering that most US aluminum smelters have closed in recent years, unable to compete with foreign plants that have lower energy costs.
“Rio Tinto Alcan is one of the few remaining aluminum smelters left in the country,” Gov. Steve Beshear said as he formally announced up to US$15 million in state tax incentives for the project.
Those incentives are intended to encourage this company to make a long-term investment for its future sustainability and help it compete at a global level.
That will help its employees “go to bed at night and sleep a little more soundly,” knowing their jobs are more secure, Beshear declared.
Officials stressed the importance of hanging onto the jobs at Alcan, where wages average US$23.64, according to the Kentucky Cabinet for Economic Development.
The Sebree smelter proposes constructing a new bake furnace in its carbon plant, which produces the big electrical anodes that are vital to the aluminum smelting process, as well as to make changes that will allow it to increase its electrical amperage and produce more metal.
The US$50 million investment would increase energy efficiency and the technical updates would make it more environmentally friendly and increase productivity. The project would also employ approximately 100 construction workers for six months or longer. |
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Minera signs option to buy
Quilavira gold exploration project |
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Minera IRL Limited has signed an option to purchase the Quilavira gold exploration project in the Tacna district of southern Peru from Ingerieria y Tecnologia Minero-Metalurgica SA (ITMM). The tenements were previously explored by Newcrest Mining. The proposed US$50,000 deal is subject to approvals in Peru.
"Quilavira represents a strategic, longer-term exploration opportunity in a highly prospective area. We are already well established in southern Peru, where our Ollachea Project is located, and Quilavira is consistent with building our business interests in selected districts", Minera IRL Executive Chairman, Courtney Chamberlain said.
ITMM previously acquired the Quilavira property from Newcrest in a competitive tendering process. On the 5,100 hectare tenement package, the main exploration target is an alteration area approximately 1,200x300m. Newcrest's previous exploration work identified a 200x200m zone of anomalous gold mineralization, sampling on the western part of the zone returned more than 1 gram per tonne gold.
Under the terms of the deal, Minera IRL has the option to purchase 100 percent with a US$50,000 payment, the acquisition is also subject to the grant of the required supreme decree by the Peruvian government. Additionally, a surface rights agreement will be negotiated with the local community before exploration activities can commence.
In January, the company reported that its Corihuarmi gold mine in Peru achieved its best production in 2009 in the final quarter,the Peruvian operation also achieved significant cost cuts and benefited from all time record gold prices.
The company said total gold production for the year reached 33,012 ounces at a cash cost of US$341 per ounce, while Q4 production amounted to 10,259oz exceeding targets by 18 percent. Quarterly cash operating costs were 23 percent below budget at US$248/oz compared to the average sales price of US$1,107/oz during the quarter.
At Corihuarmi, mining blocks in the Susan Pit that were originally defined as waste were found to be mineralized, and no waste was mined, which led to lower operating costs. The company intends to use the resulting cash flow to advance the development of its other projects. |
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Mitsui Mining plans to
increase Zinc output |
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Mitsui Mining & Smelting Co., Japan’s biggest refined zinc producer plans to increase output at its Hachinohe smelter by 11 percent in the year starting April 1, a company executive said.
The company will raise output at the smelter to 100,000 metric tons in the next fiscal year from 90,000 tons in the current year, Nobuyuki Nakamoto, general manager of the zinc business, said. The plant has capacity of 112,000 tons.
Prices for zinc, used to galvanize steel, almost doubled in the past year as the global economy recovered from its worst postwar recession, spurring production. Nakamoto said the output increase at Hachinohe was due to a pick-up in exports.
“Demand is strong following an increase in production by the steel sector for cars and brisk overseas sales, especially in Southeast Asia,” especially Thailand, Indonesia and Vietnam, Nakamoto said.
The Hachinohe plant in Aomori prefecture, northern Japan, produces prime western-grade zinc, which has a minimum purity of 98.5 percent and is used mainly for the construction sector. Special high-grade metal with minimum purity of 99.995 percent is used for steel products in vehicles.
The recovery in demand for western-grade is ‘still relatively slow because of weak capital spending’ compared with that for the special high-grade metal. The main export markets for special high-grade include China and Taiwan.
The company’s smelters at Kamioka in Gifu prefecture and Hikoshima in Yamaguchi prefecture, both west of Tokyo, produce special high-grade. Kamioka, with annual capacity of 67,000 tons, and Hikoshima, with 74,000 tons, produce special high-grade zinc. Both are operating at full capacity. The company, which is to announce its April to September output plans early next month, planned to produce 229,000 tons of zinc in the current fiscal year.
The Hachinohe smelter reduced its output by as much as 20,000 tons in the current fiscal year after the global credit crunch slashed demand, Nakamoto said.
Japan posted a current-account surplus in January as exports climbed for a second month, an indication overseas demand is sustaining a recovery.
Mitsui Mining projects Japan’s zinc exports to decline to 110,000 tons in calendar 2010, down from a record 156,000 tons in 2009, while the country’s domestic consumption may rise to 526,800 tons from 433,000 tons.
Domestic consumption in 2009 was at the lowest level since 1966, when the country used 399,700 tons, according to data from the Japan Mining Industry Association.
Japan’s zinc production may total 560,000 tons in 2010, up from 540,000 tons in 2009, while lower than output of 615,500 tons in 2008, Nakamoto said. |
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OAO GMK to process
Soviet-era copper stocks |
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OAO GMK Norilsk Nickel, Russia’s largest mining company, offered to process ‘substantial’ amounts of the nation’s copper stockpiled during the Soviet era as the company struggles to meet demand from its own supplies.
“We are running short of copper and could be selling more than we are producing,” Deputy Chief Executive Officer Oleg Pivovarchuk said, declining to say whether Norilsk would buy the metal or just process it. “We made a serious offer to the government for the copper.”
Moscow-based Norilsk submitted its offer to Rosreserve, the federal agency overseeing the inventories and it anticipates the proposal may be approved by April or May so stockpiles can be processed before winter, Pivovarchuk said.
Norilsk CEO Vladimir Strzhalkovsky met Prime Minister Vladimir Putin and asked him to help speed up approval of the plan. The company is seeking ways to benefit from a price rebound as its production falters because it is mining ore with a lower copper content. Strzhalkovsky, who forecast copper production will drop 5 percent for a second year in 2010, told Putin that allowing Norilsk to process the state reserves will help use up idle capacity. Norilsk will mix stockpiled concentrate, which contains nickel, precious metals and cobalt as well as copper, with its lower-grade feed, Pivovarchuk said the company doesn’t maintain any stockpiles of copper or nickel.
Processing the concentrate may take more than a year and probably won’t ‘significantly’ increase Norilsk’s copper output, said Alexei Morozov, an analyst at UBS AG in Moscow. Norilsk produced 402,214 metric tons of copper last year.
Prices for copper, used in wires and pipes, and nickel, a stainless steel raw material, have been driven higher by speculation and may be unsustainable, Pivovarchuk said.
Nickel producers may restart idled capacity should prices hold above US$20,000 a ton, adding to a surplus this year that may reach 25,000 tons to 30,000 tons. Restarting Furnace Industrial Metallurgical Holding, Russia’s third-largest nickel producer, restarted a fourth furnace at its Ufaleynickel unit last month as metal prices and demand improved, leaving one more furnace idle. Ufaleynickel, which halted output for eight months last year, can break even with nickel above US$24,000 a ton. |
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MMG has no plans to restart
Avebury nickel mine |
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Chinese-owned Minerals and Metals Group (MMG) has no plans to restart its Avebury nickel mine, closed in 2008 due to depressed markets, predicting recent gains in nickel prices MNI3 will be short-lived.
"What I need to see is that the current prices are sustainable, and at the moment I can't see the current prices being sustained," MMG Chief Executive Andrew Michelmore said.
London Metal Exchange (LME) three-month nickel prices MNI3 were last indicated at US$22,2800 a tonne, nearly treble the recession low of US$8,850 seen in October 2008 and up from around US$19,000 at the end of last year. Michelmore, who helped orchestrate the buyout of most of the mining assets of the former Oz Minerals by China's Minmetals in 2009, also said work was underway to extend the life of the group's giant 500,000-tonnes-per-year Century zinc mine in Australia beyond its 2015 closing date. |
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Codelco smelter back up
after quake |
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A smelter at Codelco's largest copper mine that was knocked offline by massive earthquake in Chile was up and running again, according to a spokesman for the state-owned company.
"The smelter is now 100 percent normalized," said the spokesman, The smelter at the El Teniente mine about 80 km (50 miles) south of the capital Santiago was forced to shut down in the wake of the 8.8-magnitude quake that rocked Chile on Feb. 27.
The quake, which severely damaged power lines and other key infrastructure in the South American country, compromised less than 0.5 percent of Codelco's [CODEL.UL] annual output.
Codelco, which mined 1.7 million tonnes of copper last year, is the world's top producer of the metal. |
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