Archive for the ‘aluminium’ Category

Quebecois – 1, Chinese 0, or, when AP50 means AP60

Tuesday, September 7th, 2010

Many of you will be aware that Rio Tinto Alcan is building an AP50 pilot plant in Quebec, Canada.   Announced in the pre-GFC days, the plant was originally meant to have 44 pots of the next generation of smelting technology, with an option to add more pots in the future.

That got the Chinese going.   Chalco’s R & D people in Henan province set about designing their own version of the technology, hoping to beat RTA (or more correctly, the Pechiney people who still work for RTA) at their own game.

Little do the Chinese know, but the French and French Canadians have been quietly trimming their own sails.   The pilot plant will now have 136 pots, and the team there is planning to push the amps all the way up to 600,000.   They will leave the Chinese in their dust!

Of course, it is not up and running yet, but this is the pattern that Pechiney has been following for some time.   Even when I was working with the R & D guys in Voreppe, France, their AP35 technology was actually running at 380,000 and even up to 390,000 amps.   The gap between rated speed and actual speed was becoming so great that back then, they changed the label to read AP3x.   So I don’t doubt that they will achieve the targetted speed.   Although these are monster pots and it will be a test for all concerned.

Interestingly, one RTA exec told me that they knew that Chalco was building a plant designed to run at 500,000 amps, but didn’t know much else about it.   Not even where in China this plant would be.   I guess they didn’t look at the new Chalco plant in Gansu.

Chalco to close smelter capacity

Monday, August 30th, 2010

Here is an article from Bloomberg.   Beware the sting in the tail.   In my opinion, this is nothing more than Chalco trying to grab some high moral ground.   Note that this closure of 330,000 tonnes is to be replaced by a new 500kt smelter in Gansu, so their total capacity will actually increaseThe last paragraph coyly touches on the new smelter without mentioning it will more than replace the old capacity.

Aluminum Corporation of China Limited plans to shut 330,000 tonnes of obsolete smelting capacity by 2011.

Mr Xiong Weiping chairman of CHALCO said that the Chinese government wants to close down 1 million tonnes of obsolete capacity for the industry by 2011.

The 330,000 tonnes target set by Mr Xiong represents about 8% of Aluminum Corporation’s current capacity. China has ordered more than 2,000 companies including steel and aluminum producers to shut obsolete plants by the end September.

Mr Xiong said that in the past 5 years, China’s aluminum production has developed too fast. In the next 3 years, aluminum demand will increase as the economy grows and aluminum replaces other metals. I expect the 20% to 30% overcapacity will disappear.

He said that the company plans to build new low cost facilities at Liancheng Aluminum Plant in Gansu.

Aluminium smelter news

Saturday, August 14th, 2010

News from around the industry.

UC Rusal has announced that they will resume construction of its Boguchany smelter. Phase one, comprising 147,000t, will commence operations in 2013.

Garmco has shelved plans to build a rolling mill in the Sohar precinct, instead focusing on their existing plant in Bahrain.

A consortium of Japanese investors is looking to take a stake in the part-Japanese owned smelter in Indonesia. The Indonesian government has been looking to increase its holding in the operation, prompting the Japanese to increase their own position.

Chalco is said to be about to raise its price for domestic alumina, in light of continued strength in the primary aluminium industry. This is despite imports almost doubling in July, from 140,000t in June, to 270,000t last month. The Chalco price for alumina currently stands at RMB2650. The talk is that the price will rise to RMB2800.

Qatalum suffers 5-hour power outage

Thursday, August 12th, 2010

This story comes from Reuters. A power outage in a potline is never a nice thing, but an outage while you are heating pots, bringing new pots up to speed or trying to settle them down, is a particularly nasty incident.

It doesn’t say anything in the article, but the most concerning thing for me is, if this can happen once, so early in the life of the smelter, what are the chances it will never happen again?

Norsk Hydro said on Tuesday the Qatalum smelter, a 50/50 joint venture between Qatar Petroleum and the Norwegian aluminium company, had suffered a power failure that would delay its ramp-up schedule.

“Qatalum will not be in full production in 2010. It’s too early to tell when we will achieve that, but the delay is for months, not years,” Hydro spokeswoman Inger Sethov told Reuters.

Qatalum, with a design capacity of 585,000 tonnes of primary aluminium, suffered a sudden shutdown of production, due to a power outage on Monday morning, Hydro said.

Shares in Norsk Hydro fell 4.1 percent at 0746 GMT, against a 1.2 percent drop on Oslo’s benchmark index.

“Power was out for almost five hours, leading to a significant drop in temperature in the reduction cells and making it impossible to resume metal production,” Hydro said in a statement.

The failure affected both the connection to Qatar’s national power grid and Qatalum’s own power plant, it said, adding it would investigate the cause of the failure in co-operation with local authorities.

“We had reached 60 percent of the total 585,000 tonnes capacity,” Sethov said.

The facility has 704 production cells, of which 444 were in production and must be restarted. The remaining 260 cells, which had not been put in production, will be phased in as planned by the end of 2010, the company said.

Analyst Eivind Bergkaasa at Arctic Securities said the failure was “a very serious incident in the middle of a ramp-up phase.”

“This will have a negative impact on earnings estimates for 2011, but it’s too early to say how big,” Bergkaasa said.

However, Hans Erik Jacobsen, analyst at First Securities, said he thought the Hydro stock had overreacted to the news.

“Although it’s too early to say anything about the economic consequences, it will not be significant in a Hydro context,” Jacobsen said.

Redundancies offered at Portland

Thursday, August 12th, 2010

This story comes from the Australian Broadcasting Corporation (ABC).     there’s some parts of this that don’t make a lot of sense.

On a historical basis, the relationship between the Aussie and US currencies is not sufficient reason to justify layoffs.   At the moment the Aussie is trading at about US$0.91.   But over the years the range has been as low as $0.48 to as high as $0.95.     The smelter itself is enjoying preferential electricity pricing, and with 30 years of operations under its belt, there can’t be a lot of capital charges left to pay.

The article also leaves blank the question of whether further layoffs will occur.   According to the story, the company had discussions with the unions about “all facets of the business.”   They got at least 11 people put up their hands, and apparently have been given payouts.   But after calling for a widespread review of costs, it is hard to imagine they will stop at 11.  

Many of my former workmates left Alcoa’s Point Henry smelter to transfer to the then-new Portland project.   I remember it was billed as a great employment and life-style opportunity, although one enterprising foreman that I worked with saw more lucrative financial returns.   I recall he told everyone he would move to Portland, not to join the construction or operations team, but to buy two local businesses – the taxi service and the local cathouse.   He reckoned that with so many people flooding to the town, those two businesses were set for a major boost.

Here is the story.

Voluntary redundancies have been offered to 11 workers at the Alcoa aluminium smelter in Portland.

The American-owned company is undertaking a restructure to improve its global productivity.

Alcoa spokeswoman Anna Impey says the low US dollar has affected profits.

She says the company received more than 11 expressions of interest for voluntary redundancies.

“The announcement of the offer to give voluntary redundancies follows an extensive consultation process with our employees and the unions, which we started back in April when we announced that a further restructure program involving all facets of the business was taking place to improve profitability and international competitiveness,” she said.

Valco smelter to restart

Sunday, August 8th, 2010

This article comes from the Ghana Gazette According to our database, the smelter is about 200,000t capacity.

The Volta Aluminium Company (VALCO), an aluminium smelting plant which was shut down two years ago due to power supply constraints, is to be reactivated.

Consequently, stakeholders in the company have met to consider critical issues and plot the technical details to bring the company back on stream.

Key among the issues are whether or not the current level of electricity supply in the country can support VALCO, as well as the tariff regime to ensure that the company can make profit should it start operations.

A Deputy Minister of Energy, Alhaji Inusah Fuseini, disclosed this to the Daily Graphic in Accra after a business delegation from Turkey had called on him.

The delegation was in the country as a follow-up visit to that of the Parliamentary Select Committee on Trade and Industry and some members of the Ghana Chamber of Commerce to that country.

The Turkish delegation was in the country to explore investment opportunities in downstream businesses, particularly in the oil and gas sector.

The VALCO, one of the largest smelters in Africa with a workforce of over 500, was established by KAISER Aluminium of the United States of America and the Ghana Government in the early 1960s to produce aluminium products for further processing.

The government acquired 90 per cent shares under a joint venture arrangement with the Russian giant, RUSAL, making Ghana a majority shareholder.

However, it was temporarily shut down due to inadequate power supply.

Briefing the delegation on the country’s emerging oil and gas industry and prospects, Alhaji Fuseini said with the discovery of gas and crude oil in commercial quantities, it should be possible for VALCO to resume operations and make profit.

He said with the discovery of crude oil, tariffs on utilities would be reduced to enable businesses such as VALCO to thrive.

He also hinted that the government was committed to developing renewable energy for the country’s use.

Alhaji Fuseini said as part of the plan, the country would generate electricity from soil and wind, adding that the government’s target was to achieve 10 per cent of renewable energy in the country by 2020.

Kangaroos 1, Alcoa 0

Friday, August 6th, 2010

The following article comes from the Geelong Advertiser.   This story has some personal colour.   Not only did I grow up in Geelong, and worked for Alcoa there for almost 14 years, I also had some involvement in the source of this HiCal40 product.

Those of you who know about aluminium smelting know that there is one by-product from the process which has bedevilled the industry from the start.    Yes, we are talking Spent Pot Linings.   SPL.    I had the unfortunate task several years ago, of arranging the transfer of several cargoes to Italy.   What a nightmare.  

Alcoa in Australia has been working on their own solution, which generated a grade of aluminium fluoride (as I recall), and this carbon product.    I remember my old boss at Alcoa, Ken Mansfield, eventually got the job of running this project.   Ken has long since retired, no doubt grateful he no longer has to deal with SPL.

So it’s back to the drawing board, at least according to this article.   When Alcoa approached us about their “technology breakthrough”, I recall they wanted something like $40 million for us to buy in.   It cost us only $8 million to sell the SPL to the Italians.    So I doubt it really ever got too far away from the drawing board.

Anglesea is about 20kms south west of Geelong, and is home to Alcoa’s power station that partly serves the Point Henry smelter.   Apart from great beaches, Anglesea’s other main attraction is the golf course, where kangaroos are a constant hazard – or is that target?

 

ALCOA has abandoned an alternative-fuel trial planned for Anglesea’s power station, in a win for the town’s residents.

The company was hoping to process a waste product called HiCAL40 carbon fuel, which would have increased airborne fluoride emissions.

Similar emissions at an Alcoa facility in Portland led to Kangaroos that grazed in the area developing bone deformities.

Anglesea residents were angry about the proposed trial’s health impacts on children at the town’s new primary school, which is being built on land bought from Alcoa, about 800m from the power station.
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The project was set to start this month but was put on hold after Alcoa discovered a “data error” that meant the trial did not align with EPA guidelines.

Then, yesterday, Alcoa bowed to community pressure to cancel the world-first test.

“Our recent community and stakeholder consultation indicated strong community interest in our final decision on the proposed project,” power station manager Stephanie Pearce said.

“As such, we worked diligently to resolve any uncertainty for the community by completing our review of the project.

“We have made the decision to cancel the proposed trial.”

Resident Sarah Standish planned to move her family out of town if the trial went ahead and said she was thrilled with the cancellation.

“I’m really stoked they’ve decided not to increase the fluoride emissions in the air it’s wonderful news,” she said.

However, Ms Standish expressed concern about what will now happen to the HiCAL40.

“Maybe Anglesea is saved, but what is Alcoa now going to do with their waste products?” she said.

“Is this going to end up being something for some other small town to deal with?”

Fellow resident and mother of six Kareen Umphrey also said she wanted more answers.

“I’m glad that they’ve made the right decision but I’m still concerned,” she said. “We have to find out where they’re going to dispose of that waste I want to make sure it doesn’t come to Anglesea.”

Alcoa said the HiCAL40 would be sent to “other industries”.

“The HiCAL40 product will continue to be successfully used in other industries where it is providing a range of environmental benefits including reducing greenhouse gas emissions and lowering fuel usage,” Ms Pearce said.

Alcoa confirmed HiCAL40 will never be processed in any form at the Anglesea Power Station.

“The trial is permanently cancelled,” Ms Pearce said.

Kitimat smelter upgrade to be accelerated

Friday, August 6th, 2010

Rio Tinto’s recent half-year results announcement got plenty of coverage in the mainstream press, but this angle caught my eye.

Apart from the expansion of Kitimat, which was started in 2008, but delayed when Rio found itself in a debt hole, the reporter has a wonderful final word that will surely bring a smile to those of us who still remember the old Aluminium Pechiney.

 

Rio Tinto Alcan is preparing its Kitimat smelter for a planned US$578 million upgrade by closing and dismantling two smelting pot lines to clear the way for a modernization of the B.C. operation.

The Montreal-based division of global mining giant Rio Tinto said Thursday that the site preparation work also includes the construction of a new “reduction services” building. The work is estimated to cost US$50 million and is in addition to the ongoing activities that are needed to build an anode pallet storage area and roads for the smelter’s overall upgrade.

The permanent closure of the giant pots used to smelt the lightweight industrial metal represents a 67,000-tonne reduction in Kitimat’s annual production. The larger modernization project would increase current production by more than 40 per cent to about 400,000 tonnes per year from the smelter in northwestern B.C. “The modernization of our Kitimat smelter remains a strategic priority for Rio Tinto Alcan,” stated Rio Tinto Alcan chief executive Jacynthe Cote. “With the increased activity, we are continuing to lay the groundwork for profitable growth through this important project that will transform our smelter into a top tier, low-cost, large-scale, and low-carbon asset.”

Final approval for the smelter’s full upgrade is scheduled for 2011. It is part of the US$15 billion worth of capital projects over two years that parent company Rio Tinto confirmed Thursday in its results for the first half of 2010.

The parent company’s first-half profit more than tripled amid strong iron ore demand from China and higher commodity prices as the world economy climbed out of recession. Net profit for the six months through June was US$5.85 billion, up from $1.62 billion in the same period a year earlier. The company’s underlying earnings — which exclude one-time gains and losses from events such as asset sales — were $5.77 billion, up 125 per cent.

Higher aluminum prices pushed the group’s underlying earnings to US$358 million, or US$1 billion more than a year ago. Partially offsetting the increased prices were US$226 million impact from the higher Canadian and Australian currencies.

The modernized Kitimat smelter will use Rio Tinto Alcan’s proprietary AP technology, which reduces total emissions, including greenhouse gas emissions, by up to 40 per cent per year.

Rio Tinto Alcan is also proceeding with the US$228 million construction of a new 225 megawatt turbine at the Shipshaw power station in Saguenay, Que. The project is expected to be completed in December 2012. Phase 1 of the US$429 million AP50 project in Saguenay is scheduled for approval in 2011. Work on this project and the Kitimat upgrade were slowed down in 2009 because of the economic recession which depressed aluminum demand and prices.

Rio Tinto also announced Thursday that it received a binding offer from funds affiliated with Apollo Global Management, L.P. and France’s Fonds Strategique d’Investissement (FSI) to buy a 61 per cent stake in Alcan Engineered Products, which supplies the aerospace, automotive and other industries. Terms of the transaction were not disclosed. Apollo would hold a 51 per cent stake, FSI 10 per cent and Rio Tinto 39 per cent. “By maintaining a minority interest, Rio Tinto would share in the upside potential of the business,” spokesman Bryan Tucker said in an email, adding the company has no immediate plans to sell its stake. “This is a medium-term partnership aimed at enhancing further the growth and performance of AEP and ultimately creating maximum value.” The sale is part of the miner’s efforts to sell off non-core assets acquired as part of the US$38.1 billion takeover of Alcan. Divestments, including Alcan’s packaging businesses, netted US$3.6 billion in the first half of the year, and US$10.3 billion since 2008. Rio Tinto has reduced its net debt to US$12 billion, from US$18.9 billion at Dec. 31.

The Alcan Engineered Products division, which had US$3.8 billion of sales last year, employs 10,000 people, primarily in France, Germany and the United States. It has no operations in Canada. In France, the acquisition is being viewed as a partial re-creation of a national aluminum company seven years after Pechiney was sold to Alcan.

China to cap non-ferrous output?

Monday, July 26th, 2010

The article below is one of many on the same subject.    The story has come from a Journal published in Chinese and released today.   The basis of the story seems to be a draft plan for the non-ferrous industry for the next (12th) 5-year plan, which is due starting 2011.

However, the basics of this story don’t make a lot of sense yet (and some papers, including the China Daily got their facts wrong when quoting the Journal.   My comments are based on the original article, not just the Reuters story).    The article in the journal says that by 2015, China will have aluminium capacity of 20 million tonnes, with apparent consumption running at 24 million tonnes.     Perhaps Oleg Deripaska wrote this plan for the Chinese – UC Rusal would stand to be able to import millions of tonnes of metal if this was to come about.

The article in the journal says that the government will achieve this by phasing out old, inefficient technology.   But by our calculations, China already has around 27 – 28 million tonnes of latent capacity, if we include all the new projects that are currently being built.    That means China has to retire 25% of all smelters!    It’s a bold move, if it’s true, and clearly has profound implications for alumina, the rest of the primary aluminium industry around the world, energy, the environment, and of course carbon.

But before you rush off to buy shares in UC Rusal and other “winners” from this announcement, let’s see how real the story is.   The 12th 5-year plan is not in effect yet, and there is no guarantee that this draft plan will be in it when it is promulgated.   Oh and by the way, since when have some provinces and local officials listened to what Beijing wants?


China will aim to keep total annual output of 10 nonferrous metals below 41 million tonnes by 2015, the China Securities Journal said on Monday.

The metals include copper, aluminum, lead, zinc, nickel, tin, antimony, magnesium, titanium sponge, and hydrargyrum, the report quoted Shang Fushan, deputy head of the China Nonferrous Metals Industry Association, as saying at an industry conference.

China also plans to keep total copper smelting capacity below 7 million tonnes per annum, alumina below 41 million tonnes per annum, aluminium below 20 million tonnes per annum, lead below 5.5 million tonnes per annum and zinc below 6.7 million tonnes per annum, the report said.

The association also projected that apparent consumption for base metals would reach 43.8 million tonnes in 2015 including 8.3 million tonnes for copper, 24 million tonnes for aluminium, 5 million tonnes for lead and 6.5 million tonnes for zinc.

As the world’s largest metals consumer, China will try to concentrate 90 percent of the country’s total copper output among the top ten producers over the next five years.

The top 10 lead and zinc producers will also be encouraged to take up to 70 percent of total production.

China is also drafting regulations for rare metals production as part of a five-year state development plan in order to curb blind expansion of smelting capacities.

Out with the old, in with the new

Wednesday, July 21st, 2010

Christina in our office has been calling each and every smelter to get to the bottom of what is going on in China’s aluminium industry.

After yesterday’s announcement that production had hit record highs, it was clear something had to give.

Unfortunately, it’s common sense that lost the fight. We have reported previously that smelters with amperage under 100kA had been ordered to close. Christina has found out that at least some of the smelters on the “black list” are in fact ripping out the old technology and building new cells in their place.

For instance, one smelter in Henan province has announced today that they are closing 172 75kA pots in the next two months. But they are also building a replacement line. while they would not tell us the technology for the new line, they did say that they would double their output as a result.

Shades of 2005. This is exactly what happened when the Government called for Soderberg plants to be closed. Enterprising owners simply replaced their Soderberg equipment with pre-bake, and total national capacity sky-rocketed.

In a country which so many accuse of being a controlled economy, a little control is exactly what this industry needs.