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Dear readers,


Till mid of last year, all foundrymen were having only one concern. 'How long the resent boom will last?' Now we all have got the answer, in a very unpleasant way.
As we all know, the epicenter of this economic earthquake is in developed world. The US and Europe are the most affected regions. As such economies in these regions were almost flattened and generally not much growth was expected there. However, lot of outsourcing was being done by automobile manufacturing companies and their ancillaries to Asia and specially to India. That is how Indian foundry industry was witnessing a boom. Good and continuous orders from domestic players and tremendous export potential getting unfolded.
Presently, the Indian auto market is down with sales of most of the vehicles dipping as compared with the figures of last year. Many leading automakers like Tata, Mahindra, Ashok Leyland have drastically reduced their production which has in turn reduced their requirement of castings. Also, as US and EU are most affected by recession, their orders on the Indian foundries are getting cancelled. The result is that the foundryman's orderbook, which was full till few months back, is looking empty today. No wonder, lot of foundries have cut their production and many have opted to put their shutters down for indefinite period.
What is the way ahead? How long this situation will continue? I think nobody knows exact answers to these questions. Firstly, Indian economy is not strongly linked with the world economy and specially with that of US and EU. Not much of overseas capital has been employed in the Indian businesses and as such India is a domestic demand driven economy. The Indian government has pumped in some liquidity in the system. The bank interest rates have been reduced to induct growth in the industry and also facilitate higher automobile sale. Further, excise duty has also been reduced. All this is expected to impart some momentum to the economy.
One must remember that falls are always sudden whereas the climbs are gradual. The situation will improve but will not improve overnight. It may take few months or even a year for the economy to come on track. One thing is sure, India will be one of the first countries to restore economic normalcy.

D.A.Chandekar
Editor & CEO

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Vedanta Set to Complete Orissa Projects Despite Credit Crunch: Agarwal

NALCO Postpones Saudi Arabia Project

World Aluminium Output Drops in November

RSB to Set Up Aluminium Complex in Orissa

Ess Dee Aluminium to Resume Hoera Unit Operations by March 2009

Nalco Forms JV with RAK Minerals

India's Apr-Nov Aluminium Production Falls Short of Target

Chelyabinsk Zinc Cuts 2009 Output Forecast

China Jiangxi Copper Smelter Capacity Down 20%

Copper May Melt Most in 21 Years as World Slows Down

Chinese Minerals Look Positive in Recession

McNally Bharat Wins Rs 244-cr Orders from Vendanta

Nalco Raises Estimate for Sumatra Plant to $4 Billion

Jiangxi Copper to Pour Capital into Subsidiary

Rio to Sell Stake in Chinese Aluminium Smelter

Vedanta Seeks 1,200 Acres More For Bengal Plant

India's Copper Demand to Sustain the Economic Downturn

AFMA to Set up Foundry Park in Ahmedabad

Duty Waiver on Metals May Narrow Price Gap

Neyveli Lignite Board Approves Capital Raising

Zijin Mining may Form $380mn Joint Venture

Sterlite to Face Counter Bid for Asarco

Indonesia's Metal Output Declines

Domestic Aluminum Demand to Hold Nalco, Hindalco Strong

Mikhail Prokhorov may Increase Rusal Stake

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Vedanta Set to Complete Orissa Projects Despite Credit Crunch: Agarwal

Anil Agarwal led Vedanta Resources has indicated that it will continue its Rs 50,000 crore investment plans for Orissa despite credit crunch.
The company plans to raise the capacity of its aluminium smelter to 2 million ton, Lanjigarh alumina refinery capacity to 5 million ton per annum and generation of 4,000 MW power in the state. “I assured Chief Minister Naveen Patnaik that we will complete our projects,” said Agarwal. Vedanta Alumina, part of the Vedanta Resources is also building an alumina refinery with an investment of $800 million in the Kalahandi region, Orissa. "Kalahandi alumina project has started production. Very soon we are going to start the mining in the region after abiding by a Supreme Court guideline," Agarwal said.
Agarwal said the company has agreed to help the state government in stetting up an aluminium park, which is comprised of 700 small and medium enterprises, at Jharsuguda. The company will not only provide the metal required for these units, but also supply them power from its 4,000 MW power plant in the locality. Agarwal expressed his optimism over mining of bauxite from Niyamgiri hills, which has been shrouded by controversies. Asked about the time frame for starting the mining of bauxite, he said, it is in progress and will start within a month or two.
“We have got the full clearance of the Supreme Court for bauxite mining in the Niyamgiri hills and have deputed staff in large number for initiating the work”, Agarwal added. The Anil Agarwal Foundation is setting up a multi-disciplinary world-class Vedanta University near the Konark-Puri Marine Drive with an investment of Rs 15000 crore($3.75 billion) in phases.  

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NALCO Postpones Saudi Arabia Project

State-owned National Aluminium Company Limited (NALCO) has postponed its Saudi Arabia plans, after being unsuccessful to collaborate coal for the project. The company also had put its Rs 150 billion South Africa project on hold.
“Both projects are on hold as there is little progress on coal linkage," said a media report citing a senior official from Navratna. The company had planned a 0.5 million ton per annum (mtpa) aluminium smelter and 1250 mw captive power plant in South Africa. It was in talk with the Tata group for a joint venture for the project. NALCO had announced in January 2008 its plan to enter Indonesia, Iran, Saudi Arabia and South Africa. The company's Indonesia and Iran projects are shaping up well and the company has identified two coal mines in Indonesia. The company has signed a memorandum of understanding with one of the mine owners for developing the mine.
Nalco is expected to spend Rs 15,000 crore for the project which is scheduled to start by early 2010. In Iran, the state-owned firm is setting up a gas-based 0.31 mtpa aluminium smelter and a 750 mw power plant. Currently, Nalco is in the final stages to form a joint venture for coal supplies in Iran. The official said, “It's only a matter of time that we will finalise the JV in Iran.” On the domestic expansion front, Nalco is spending Rs 9,500 crore to expand its alumina, aluminum and power capacities. It is on track to expand its alumina capacity to 2.1 mtpa from 1.58 mtpa. The official said that the alumina refinery will begin production from August 2009. The company is increasing its aluminum capacity from 0.345 mtpa to 0.47 mtpa and sees production reaching full-scale by April 2009. It said that the expansion of captive power generation capacity from 960 mw to 1,200 mw will be completed by May next year.

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World Aluminium Output Drops in November  

World production of aluminium dropped by 105,000 tons in November, 2008, said a recently published data by International Aluminium Institute (IAI).
In November, the total aluminium production dropped to 2.082 million ton as compared to 2.187 million ton in October. Coincidently, the world output of aluminium in November, 2008 is same as the total aluminium produced during the same month of 2007. In November, the total aluminium production from North America posted a decline as total aluminium production was 460,000 tons compared to 483,000 tons in November. Nearly all the major aluminium producing region saw a decline in the levels of output as production dropped. Aluminium production from Asia dropped to 314,000 tons from 346,000 tons produced in October. Moreover while production of aluminium from West Europe declined to 375,000 tons as against 392,000 tons produced in October. Output of aluminium from East/ Central Europe stood at 384,000 tons as against 397,000 tons in October.

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RSB to Set Up Aluminium Complex in Orissa

RSB Metaltech, a subsidiary of the RSB Group, signed a MoU (memorandum of understanding) with the Orissa government to set up a Rs 6,800 crore integrated light metal aluminium complex in the state.
Under the project, the company will build facilities for production of 7 million ton alumina and 1.75 million ton aluminium. The project will be developed in the phased manner. In the first phase, 90,000 ton of metal will be converted to final products for automotive, aerospace, railway and construction sector industry applications. In the second phase, 1.75 million ton will be converted into final products. Meanwhile, the mining and alumina refineries will be coming up in the Rayagada district of Orissa. The aluminium smelting units, captive power plants and the downstream facilities are being planned in Kamakhyanagar in Dhenkanal.

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Ess Dee Aluminium to Resume Hoera Unit Operations by March 2009

Aluminium foils packing company Ess Dee Aluminium will reopen its Hoera facility by March 31, 2009.
"We are in the process of finalising the details of the plan to reopen the Hoera factory," said Sudip Dutta, chairman and managing director, Ess Dee Aluminium. Ess Dee Aluminium recently took over India Foils (IFL).
Ess Dee is already investing Rs 115 crore on rehabilitation and to scale up operations at Kamarhati factory, IFL's only operational unit. The company wants to turn Hoera plant, which has been closed for last four years, into a profit making unit. Hoera unit will supply to the packaging needs of the FMCG sector, in line with Ess Dee's future growth plans in that area. “When fully integrated, the IFL-Ess Dee combine will convert some 36,000 tons of foils, twice the level of Ess Dee's present capacity. In the next three months, we will achieve full production capacity of 90,000 tons at the Kamarhati unit," said Dutta. “We are also planning to meet pharma companies to invest in an integrated pharmaceutical plant in West Bengal. If that happens, prices of medicines could come down by 20-30 percent in the state.

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Nalco Forms JV with RAK Minerals

National Aluminium Co and United Arab Emirates government-linked RAK Minerals and Metal Investment (RMMI) have signed a joint venture agreement to build a five lakh ton smelter in Indonesia. Under the $4 billion worth project, NALCO and RMMI will build a $2.5-billion aluminium smelter and a $1.5-billion power plant with a capacity of 1,250 megawatts power in South Sumatra province to support the facility. NALCO has 76 percent stake in the projects, while RMMI holds 24 percent stake.
The projects, which will have capacity to produce 500,000 tons of aluminium metal per year and require 1 million tons of alumina for its feedstock, are expected to be completed by 2013. The alumina will be provided from India. "The smelter needs a lot of energy and we have a lot of energy in India, but still we find that it makes sense to put the power plant near coal mining here in Indonesia," said B. L. Bagra, NALCO's director. NALCO will seek a local partner for the projects and will talk with Indonesia's state-owned PT Aneka Tambang, informed Bagra. In January, the company had obtained approval from the Indonesian government for the projects.

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India's Apr-Nov Aluminium Production Falls Short of Target

India output of aluminium from private as well as public companies has added up to 844,489 tons in the April-November period, against the target of 851,789 tons, unveiled a recently published data by the Ministry of Mines.
For the same period in 2007, the total aluminum production was 818,239 tons. The country also could not achieve the production target set for November as the public and the private companies together produced 104,532 tons of aluminium against the target of 106,856 tons. Moreover the country's copper production accounted for 414,097 tons as compared to 456,877 tons of copper cathode produced during April-November period. Total copper cathode production in November stood at 48,872 tons against the target 38,448 tons. Meanwhile total primary zinc production during April-November was 368,876 tons against the target of 435,830 tons. Primary zinc production during the same period a year ago stood at 271,786 tons. The provisional data has informed that actual zinc production during November stood at 53,542 tons as against the target of 58,443 tons.
During the same time the total lead production stood at 39,015 tons as against a target of 49,446 tons. In 2007, during the same period total lead production stood at 36,115 tons. In November, total lead production was 4979 tons as compared to the target of 4029 tons.

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Chelyabinsk Zinc Cuts 2009 Output Forecast

Russia's largest zinc producer Chelyabinsk Zinc Plant revised its 2009 forecast for the second time in 2008 after recording a loss in the first nine months of 2008. “The total production will be somewhere between 100,000 and 110,000 of zinc," said Chairman Sergi Moiseyev of the company. “This is what we expect now, unless the price goes up substantially." he added. In October, the company had expected to produce 150,000 ton. Chelyabinsk did not give its earlier forecast for 2009. The company has produced 130,000 tons of zinc in the first nine months of 2008. Chelyabinsk had planned to increase capacity to 200,000 tons and to be self-sufficient in raw materials by 2010.
But metal prices have plummeted from record peaks as the global financial crisis has cut demand.

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China Jiangxi Copper Smelter Capacity Down 20% 

China's top integrated copper company Jiangxi Copper Co Ltd would face a 20 percent decline in production capacity at its main Guixi smelter due to an equipment malfunction.
An oxygen generator at the smelter, which produces about 45 percent of total oxygen generation volume, had been broken down and would take more than six months to repair, said the company in a statement filed with Hong Kong Stock Exchange. “That generator is part of the system supplying for our 600,000-ton-a- year smelting capacity using copper concentrate as feed," said a spokesperson of the company. The damaged oxygen generator could slash an annul rate of 120,000 tons of blister, a smelter material for refined copper production from that capacity. The company has found the problem during a month-long maintenance in early December. It had completed the maintenance and was starting production at the smelting facility, except that oxygen generator. The firm also operates another 200,000 tons of smelting capacity using as feed in Guixi, for which operations are not affected, said the spokesperson. Jiangxi Copper has 700,000 tons of refining capacity and is expanding the capacity. That could keep the firm's refined copper production in 2009 from falling below this year's output.

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Copper May Melt Most in 21 Years as World Slows Down

Copper dropped at its lowest annual level in over two decades in London trading. Copper dropped by 56 percent in 2008, the worst performance since 1987. The metal, which typically tracks industrial production, ranked 16th out of the 19 commodities included in the Reuters/Jefferies CRB Index. Nickel, oil and gasoline were worst hit.
The Federal Reserve chopped its benchmark interest rate to range of zero to 0.25 present and shifted its focus to debt purchases to revive the economy. A survey of economists says that copper growth in the US , the biggest consumer of coper after China, will be gloomy and declined by 1 percent next year, compared with1.2 percent gain in 2008.“Things are going to be a lot better next year than a lot of people think,” said Lars Steffensen, founder and managing director of Ebullio Capital Management LLP, a commodity hedge fund based in Southend-on-Sea, UK “The US is going to print the dollar to get out of the recession and anything tangible, like industrial metals, is going to be worth more.”
Copper for delivery in three months rose $20, or 0.7 per cent, to $2,935 a ton on the London Metal Exchange. The metal reached a record $8,940 on July 2. Futures for March rose 0.6 per cent to $1.328 a pound in electronic trading on the Comex division of the New York Mercantile Exchange.
The four worst performers in the 162-member Bloomberg World Mining Index this year were copper producers or explorers. Katanga Mining Ltd., which is restarting the Democratic Republic of Congo's largest underground copper mine, fell 98 per cent. China's economy expanded 9 per cent in the third quarter, the slowest pace in five years. Industrial output grew the least since 1999 in November, exports fell for the first time in seven years and inflation was the weakest in almost two years, reports showed.

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Chinese Minerals Look Positive in Recession

Global mineral giants may be facing difficult time in the recessionary market but some Chinese mineral players are taking this period positively.
"The present crisis offer a rare opportunity for our domestic companies to start cooperation with foreign enterprises," said Xao Yaqing, general manager with state-owned Aluminium Corporation of China (Chinalco). "When the time is ripe, overseas acquisitions, strategic investments and joint development could all be considered." In 2008, the Chinese metal, mining and energy companies were engaged into the acquisition process at al large scale, showed Statistics from the December issue of Caijing. Seven transactions were completed and three remain in progress. There were five such cases in the past three years. About 10 major nonferrous metal companies, including Chinalco, are considering further overseas mergers and acquisitions.
The acquisition strategy was in line with the government's policy to encourage state-owned companies to invest in foreign mining companies to secure mineral resources. According to Xiao, China's material and energy enterprises should have a role in global resource allocation. "We have long been providing products to other countries with our own natural resources. Now it's time to contribute to the world economy with world resources," he said.

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McNally Bharat Wins Rs 244-cr Orders from Vendanta

McNally Bharat Engineering has bagged orders worth Rs 244 crore from Vedanta Group for two of its mining plants- one for its zinc benefaction plant at Rajahs and other for aluminium handling package at Orissa, said in a notice to Bombay Stock Exchange. McNally Bharat Engineering had also received orders worth Rs 86.66 crore from Essa Constructions (India) for supplying engineering materials.

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Nalco Raises Estimate for Sumatra Plant to $4 Billion

India's largest alumina maker National Aluminium Co has estimated a 25 percent to $4 billion increase in the cost of aluminium smelter in Sumatra, Indonesia to pay for extra infrastructure, including rail links.
The company may invest $2.5 billion to build a plant capable of processing 1 million metric tons of alumina into 500,000 tons of aluminium ingots, said B.L. Bagra, finance director of the company. He added that the alumina for the smelter would be shipped from India. PT Tambang Batubara Bukit Asam will supply coal.
The remaining $1.5 billion will be for railways, a 1,250-megawatt coal-fired power plant and a port. The project will be located in Sumatra because coal supply for the power plant is nearby and Indonesia is a major market.

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Jiangxi Copper to Pour Capital into Subsidiary

Jiangxi Copper Corporation, China's second-biggest copper producer, plans to pour $39.12 million of capital into subsidiary to increase its production capacity of electrolytic copper foil. The move will almost double its capacity.
Production capacity of the subsidiary, JCC-Yates Copper Foil Company, a joint venture between Jiangxi Copper and US-based Yates Copper, will increase from 6,000 tons per year to 11,000 tons per year, Jiangxi Copper said in a stock exchange filling.
It is expected to achieve an annual sales volume of 408.7 million yuan.

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Rio to Sell Stake in Chinese Aluminium Smelter

Rio Tinto Group, the world's third- largest mining company, sold its stake in an aluminum smelter in China to a partner to help reduce debt. Qingtongxia Aluminium Co. will buy Rio Tinto's 50 percent stake in the venture. The company did not reveal the price of the transaction.
Rio Tinto is reducing capital spending and selling assets to pay $38.9 billion debt, mostly acquired when it took over Alcan Inc. in 2007, as aluminum prices slide. According to Beijing Antaike Information Development Co, demand for the metal in China, the world's largest user, may rise in 2009 at the slowest pace since 1997.
According to analyst of CRU International Ltd the deal may be valued at several hundred million yuan and Rio may also sell its packing and engineering product assets in China as part of a global strategy. Alcan paid about $150 million in 2004 for the 50 percent stake in the smelter that can produce as much as 150,000 metric tons of the metal a year. Qingtongxia owns 30 percent with the remainder owned by Ningxia Electric Power and Investment Co.
“Completion of the transaction is expected in the first quarter of 2009, pending clearance of certain Chinese government approvals,” said the company. The joint venture is Rio's only aluminum smelting plant in China and includes 43.5 percent of a coal-fired power plant. Rio Tinto said last November it may sell as much as $30 billion of assets. It wants to sell Alcan's packaging and engineering product units, its talc unit and other mining projects..

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Vedanta Seeks 1,200 Acres More For Bengal Plant

Vedanta Aluminium, a subsidiary of Vedanta Resources, would ask an additional 1200 acres from the West Bengal Government for its proposed greenfield plant in the state.
The company already had acquired 200 acres at Bidhanbag in Asansol region. “We will require another 1,000-1,200 acres. The government will facilitate in giving us the land,” said a Vedanta official. Vedanta Aluminium was in the process to building an alumina plant with a capacity of 6.5 lakh tons and a 1,500 MW power plant in the state in the first phase. In the second phase, the production will raise up to 1 million tons and power generation capacity would also be augmented by another 1,500 MW. The total investment for the project was around Rs25, 000 crore. The company is also setting up a similar greenfield facility at Jharsuguda in Orissa, where the alumina smelter capacity would be 2 million ton annually. In the first phase of the West Bengal project, the fund requirement would be around Rs 14,000 crore. Asked whether the ongoing credit crisis would affect fund raising by the company, the official said that there was no dearth of funds.
Vedanta Resources, the holding company, had $5 billion cash reserves in hand. Besides, the company was also talking to banks for arranging finance for the project. The official said that the first phase would be ready by 2011, adding that there would be no time overrun for the project. He said that the project would give direct employment to 1,000 people.

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India's Copper Demand to Sustain the Economic Downturn

India's thousands of medium and tiny secondary copper smelters that were shut about a year ago due to falling demand are now considering reviving their units on prospects of demand from housing and capital goods sectors rising. These units produce over 40 per cent of the red metal produced in the country. The revival of these units is significant as a number of secondary copper and allied industries would resume their operations and provide jobs to over 100,000 skilled and unskilled workers in addition to increasing the domestic availability of copper by 10-15 per cent from the present output of 1.4 million tonnes. As copper prices have declined to one-third, these units are chalking out capital availability to revive their units gradually. “Funds from abroad have dried up. Local banks and financial institutions are going slow, especially for unorganised sector players. But, loan against property and stocks will be easily available and therefore, there will be no problem for working capital for these smelters,” said Surendra Mardia, president of Bombay Metal Exchange, the 50-year-old association of primary and secondary copper producers in the country. The exchange, with a membership base of over 500 from organised and unorganised primary and secondary producers has been representing over 75-80 per cent of copper output in India. This is the right time for closed smelters to resume their operations if working capital needs are met. These smelters, with the production capacity of up to 600 tonnes each per month were closed at a time when copper prices were hovering around $8,800 per tonne in April this year. Simultaneously, the prices of copper scrap, a major raw material for secondary copper manufacturing, was quoted around $4,000 per tonne which was proving unviable for these smelters to run their businesses. Non-viability was the major problem these smelters faced because of the high prices of copper scrap and poor domestic demand. Additionally, the availability of copper scrap was adding to their worries. “India's real estate sector is immune to developments in rest of the world. Demand for commercial and residential properties has slowed down but not wiped out completely. But, given the measures taken by the government with the stimulus package and huge investment outlay for the power sector, the infrastructure sector is set to grow much faster in India than in other developing or developed nations. This will drive copper demand as well,” said Ajit Advani, CEO of International Copper Promotion Council (India), an Indian arm of the Lisbon-based International Copper Study Group.

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AFMA to Set up Foundry Park in Ahmedabad

Ahmedabad Foundry Merchants' Association (AFMA) and the state government have jointly planned to set up a special engineering and foundry park in the outskirt of Ahmedabad city.
The park will have 1,000 units. About 650 small and medium enterprises have shown interest in setting up units in the proposed park as part of their expansion plans. These companies are expected to sign Memorandum of Understanding (MoU) with the state government during the forthcoming Vibrant Gujarat Global Investors' Summit. The park is expected to attract an investment of Rs 700 crore and also anticipated to generate about 45,000 employments. The coming of Tata Motor's Nano project near Ahmedabad is expected to provide impetus to the engineering and foundry units.
“In view of the increasing pollution in and around the city, we have been developing cluster of 600 units, and had requested the state government to allot us 1 million square yards of land. In the meantime, the state government was in the process of setting up an industrial estate near Kathawada village on 1.7 million square yards of land. The estate can accommodate 1,000 units,” said Ahmedabad Foundry Merchants' Association's Chairman Gaurang Shah.

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Duty Waiver on Metals May Narrow Price Gap  

The fresh stimulus announced by the government for commodities including zinc is likely to spur demand to some extent and protect the interest of domestic players including Hindustan Zinc and Binani Zinc. The Government restored 5 percent import duty on zinc which was waived in the Budget 2008-09. However, industry leaders feel more needs to be done to get these sectors back on track. “To that extent it will act as a disincentive but what the government should do is to increase the import duty to 20 per cent from the current levy of 5 percent,” said an analyst.

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Neyveli Lignite Board Approves Capital Raising

 Neyveli Lignite Corp's board has approved raising of up to Rs 1850 crore worth capital through various means, the company statement said. The company board has given an in-principle approval to raise 12.50 billion rupees, either through local-currency term loan or external commercial borrowings or by way of issuing bonds, the statement said. The coal miner and power generator also plans to raise 5 billion rupees through secured non-convertible taxable bonds by way of private placement, with an option to retain oversubscription of 1 billion rupees, it said. The company intends to raise capital for the projects presently under implementation.

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Zijin Mining may Form $380mn Joint Venture

Zijin Mining Group Co., China's largest gold producer, said its board approved a proposal to start negotiations with its major shareholder to form a 2.6 billion yuan ($380 million) venture to build a copper refinery, reports said. The venture with Minxi Xinghang State-owned Assets Investment Company will be located in Shanghang, in the southeastern province of Fujian, with a capacity of 200,000 tons a year. Meanwhile, China's copper output fell 6.4 per cent in November as the world's biggest copper producer churned out 442,872 tons of the red metal, the National Statistics Institute (INE) said. Output from January through November this year fell 3.7 per cent compared to the same period last year to 4,879,828 tons. In October, China's copper output tumbled 7.0 per cent.

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Sterlite to Face Counter Bid for Asarco

Sterlite's revised offer to acquire Asarco may see fresh rival bids as the valuation of the bankrupt US copper miner fell in line with the commodity prices. The company announced its negotiation with Sterlite even though Asarco had recently terminated the offer of the Indian miner, when Sterlite said it couldn't close without a significant reduction in price. The Vedanta group's flagship firm had recently submitted a revised bid, which is believed to be $500 million less than its earlier offer of $2.6 billion, citing drop in the metal prices and financial crunch. “A slew of metal firms from the US and Europe are negotiating with Asarco. However, Sterlite Industries continues to be the favourite of workers' union and legislators,” said informed sources. A Sterlite spokesperson declined to comment on the development. With the declining price of copper, Asarco turned unprofitable in October with a $10.7 million net loss in the operating report for the month. Sales were $106.7 million, and the operating loss was $21.4 million. The price of copper is down 44 per cent this year. Asarco, which operates three large copper mines, had filed for bankruptcy protection amid asbestos lawsuits in 2005. Grupo Mexico owns 100 per cent of the company's equity but has lost control of the board because of the bankruptcy filing. The case is in the US Bankruptcy Court at the southern district of Texas. Judge Richard Schmidt set January 13 as a hearing date to revisit the issue of the company's bankruptcy emergence plan. On May 31, Sterlite emerged as the lead bidder with $2.6 billion offer to buy Asarco's operating assets. But Grupo, which has vowed to fight the Sterlite's Asarco purchase, had proposed a $4.1 billion revival package. Opponents, including members of United Steel Workers, a trade union in the US, have lined up to bash Grupo, controlled by Mexico's third-richest man German Larrea, and picketed Asarco's mines around Southern Arizona. Sterlite had in October decided to cancel the earlier offer, citing steep fall in copper prices. Soon after, the US firm's estranged parent Grupo Mexico pulled out of its counter bid.

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Indonesia's Metal Output Declines

Indonesia's output of coal rose slightly in 2008, but production of other key commodities including copper and tin fell, the energy and mines minister said, amid a recent downturn in commodity prices. Indonesia has some of the world's largest deposits of gold, nickel, tin, coal and copper, with several leading international mining firms, including Freeport-McMoran Copper&Gold, operating in the country. Coal output in 2008 is estimated at 225 million tons, up just 3.7 percent from 217 million tons in 2007, but 2009 output will be unchanged from this year. Copper output fell 27 per cent to an estimated 580,950 tonne in 2008, from 797,400 tons in 2007. Tin output fell 13 percent to 79,210 tons in 2008, from 91,280 tons in 2007, while nickel-in-matte output fell 4.8 percent to 74,160 tons this year, from 77,930 tons in 2007. The overall investment in the mining sector rose to $1.6 billion in 2008, from $1.2 billion in 2007. Indonesia's parliament passed a new law this month on coal and mining that promises more certainty for investors although it has stirred concern it may deter major new foreign investment. Government officials expect the new law to boost revenue from the mining sector as Jakarta is keen to gain greater control of its natural resources.

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Domestic Aluminum Demand to Hold Nalco, Hindalco Strong

Given the huge infrastructure allocation by the government and the private sector players, the domestic aluminium demand is likely to continue and keep major producers including Hindalco and Nalco afloat. Being a part of the world's lowest-cost producers' quartile, the day has been saved for our National Aluminium Company (Nalco) and Hindalco. Even in this highly cost-efficient group, not every constituent is doing at this point anything more than just breaking even; such has been the steep fall in aluminium prices in the past four months. It is only to be expected that the world economic outlook being what it is, the aluminium market will see a marked fall in open interest and liquidation of long positions. Of this, we are seeing ample demonstration on the London Metal Exchange (LME) and the Shanghai Futures Exchange (SHFE). In fact, the mood is grimmer at SHFE than at LME. In the first three quarters of 2008, China alone had a share of over 10.3 million tons in the world aluminium production of 30.373 million tons. Even though the energy cost in China is high and the country does not boast of good quality bauxite deposits, it considered it wise to lift alumina refining and metal smelting capacity to 25 million tons and 15 million tons respectively in a drive the world has not seen before. The global meltdown and its own GDP growth slipping by a few notches will now put to question the wisdom of building such huge steel and aluminium capacity. The World Bank says the next year's Chinese growth of 7.5 per cent will be the lowest in as many as 19 years. hile China itself admits that the steel industry will be better off if nearly 100 million tons of polluting capacity is put to sleep, the fact remains that at the current LME price of $1,600 a tonne, hardly any Chinese smelter is able to recover costs. Monitoring agency CRU International will go further to say all smelters in China are losing money. Now that the National Bureau of Economic Research has confirmed that the US slipped into recession in December 2007 after experiencing continuous growth for six years and a recovery not in sight, aluminium industry officials say the metal price could fall further. At the same time, no one is sure where the bottom will finally be found. Of the world aluminium use of 37.838 million tons in 2007, the share of the transportation sector was about 30 per cent and of the construction sector over 20 per cent. Fortunately for Nalco and Hindalco, as the Indian economy will be growing at about 7 per cent, the growth rate of domestic demand for aluminium should remain more or less intact.

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Mikhail Prokhorov may Increase Rusal Stake 

Mikhail Prokhorov may increase his take in Rusal to 19 percent if the aluminium major issues shares to repay some of its $3 billion debt to the Russian billionaire, reports said. The deal would then enable a complex chain of debt repayments and stake reshuffling between three tycoons. Prokhorov currently holds 14 percent in Rusal, and the company owes him money. In October, it deferred the payment of a $700 million tranche as it could not meet the deadline on it. Vedomosti said the tranche was then split into two, and RUSAL missed the Dec. 1 new deadline on the first half of it. It added that the money was part of a total $3 billion owned by the company to Prokhorov. Rusal, controlled by another billionaire Oleg Deripaska, has been forced to divest assets under margin calls, while the financial crisis prompts it to cut output and staff. As the company is unable to pay him, Prokhorov is open to the idea of it issuing around 5 percent in new shares, which would then increase his stake to 19 percent, Vedomosti reported citing acquaintances of Prokhorov, his former business partner Vladimir Potanin and Deripaska. Such a deal would make Prokhorov Rusal's second largest shareholder after Deripaska, who will retain control, it said. The rest of Rusal's debt could be bought out by Potanin, who in turn could fund the purchase by selling his 35 percent in Polyus Gold to tycoon Suleiman Kerimov, Vedomosti said, adding that such a possibility had been confirmed by a source close to the gold company. Potanin could then take RUSAL's debt to VTB bank. According to earlier press reports the state-controlled bank holds around 18 percent of his Norilsk Nickel shares as collateral for a loan, on which margin calls have been missed.

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