Monthly Archives: October 2011
Fifi Wu and I attended the signing ceremony for ZCGG’s JV relationship with Mubadala today. The JV will be responsible for the construction and operation of a 500,000t CPC plant. The plant will be located close to the existing ZCGG complex.
Some interesting points arose from our discussions with various attendees:
* One of Mubadala’s key imperatives was the long-term supply of green coke. I was told that a supply agreement has been signed with Sinopec, and from inference other producers. Indeed, Sinopec, CNPC and CNOOC all had representatives at the function.
* Mitsubishi is of course a partner in ZCGG, especially in relation to the met coke and graphitised coke produced there. Mitsubishi was also well-represented there.
* Speaking of Mistubishi, I was told that the anode plant at the ZCGG complex would soon be expanded to its original design capacity of 220,000t. It is presently operating at half that.
* Mitsubishi are also in discussions with ZCGG for a cathodes plant to be built next to the anode plant.
* The CPC plant will be 500,000t initially, but it seems that there is a possibility that the plant will eventually double in size.
* The technology will of course be vertical shafts, but the design will come from ZCGG’s own development. Although the nameplate capacity will be 500,000t, it is hoped that the plant will exceed that in real life.
* Construction will commence as soon as the government relocates the farmers presently occupying the land. See the photos below.
* One unfortunate non-attendee was the Dubal representative. It seems he/they chose to fly to Nanjing from Beijing. But Beijing airport was closed due to fog last night and this morning. The rest of us took the train, including the UAE Ambassador to China.
Here are some photos from the event.
VIPs included the Mayor of Zhenjiang and several other politicians
Mubadala team
Farmers work the land in front of their houses. All this will be cleared for the new calciner.
AZ China's Fifi Wu with Ma Shixiang of ZCGG
Zhenjiang Coking Gas Group company (ZCGG) has today issued a press release announcing the formation of a Joint Venture with Mubadala Development Company, to construct and operate a calcining plant.
The plant will be on the Yangtze river, near the present-day ZCGG plant, and will have an annual output of 500,000t. Construction will commence by the end of this year, with marketable grades of CPC produced by the end of 2012.
Mubadala is best known in the primary aluminium industry for its part-ownership of Emirates Aluminium, or EMAL, in Abu Dhabi. ZCGG, through their subsidiary Surun, is China’s largest exporter of calcined coke, and also enjoys an excellent reputation among their customers. The JV partners have formed a company called Jiangsu Suyadi Tancai Company Limited (“Suyadi”).
There will be a ground-breaking ceremony on Monday. AZ China has been invited to attend, so we will provide more information, and hopefully photos, after that.
AZ China has been asked by one of China’s leading carbon companies to help them find a new General Manager, Calcining.
The General Manager will be responsible for the marketing and sales of calcined petroleum coke from the company’s new calciner, in China. The calciner will be fully operational by the third quarter of 2012. He or she will also be responsible for the operations of the calciner, but it is expected that the General Manager will concentrate on developing markets, fostering relationships and negotiating contracts with clients and customers. The General Manager will have a full team of professionals managing the day-to-day operations of the calciner to support him/her.
Candidates for this position must have excellent knowledge of the calcined coke market, preferably with a background in calcined coke sales and marketing and/or in operations management for a calciner.
Chinese language is not needed in this position, though an understanding of and affinity for the Chinese way of doing business is highly desirable.
The plant will have the highest standards for employee health and safety, environmental protection, and product quality. The General Manager will be responsible to achieving and maintaining these standards.
This position will require an amount of international travel, visiting prospective clients, attending conferences, presenting papers and so on.
The position will report to the Board of Directors. Our client has an excellent reputation in the carbon industry, and is one of China’s most successful exporters of carbon for the aluminium industry.
The salary package, including relocation costs, performance bonuses and other cash and non-cash benefits is in line with the seniority of this international level position, and will be discussed with the successful candidate.
It is recognised that applicants may well be in a similar position in another company, and that strictest confidence is needed. Applicants should therefore apply only to Paul Adkins at AZ China. Only Paul and the CEO of the client company will have access to candidates’ names or details. For more information, or to apply, write to paul.adkins@az-china.com.
Sinoway Group’s pet coke calcination plant project in Weifang, Shandong province has laid foundations and is scheduled to start the first heat-up steps in April 2012, with marketable grades of calcined pet coke being produced by August. This is according to the press release that Sinoway has issued.
The plant will be known as Sinoway Carbon and is 100% owned by Sinoway. Sinoway did explore the feasibility of working with its Indian partner on the project, but the two groups have since amicably parted ways.
The plant will supply calcined petroleum coke for markets in Australia, the Middle East and other regions and looks to be a world-class plant in terms of operating efficiency and product quality.
With all the flak China gets from the RoW about various political, social and environmental issues, there is one thing no one can debate – China knows how to get a message across to the masses. Although predominately known for being opaque in many ways, China speaks quite loudly and frequently whenever they undertake projects that should improve their image (as any good country’s PR team should do). The message of late is that China is serious about using wind power to make electricity.
According to the Energy Research Institute and noted by a Caixin article here, wind power is going to meet 17 percent of China’s electricity demand by 2050. This would mean an installed wind power capacity of 1 billion kilowatts. A friend recently noted that China truly is walking the talk when it comes to using wind energy as evidenced by the multitudes of turbine blades being trucked out west near Gansu. Most other countries promote their clean energy in words only, shying away from the high capital cost (a single 1.5-megawatt turbine costs 12 million yuan - US$1.8 million) and rather shifty wind supply in favor of more dependable and traditional means of power generation. Some estimate over 35,000 turbines already call China home. And China, never one to build with hesitation when it comes to infrastructure projects, will invest another 12 trillion yuan in capturing even more wind over the next forty years. But this supply isn’t being driven by market demand; it’s entirely propped up on government subsidies.
As reporter Lu Zhenhua noted in an article on the same topic “limitless winds do not translate into limitless profits”. Countless Chinese wind farms have yet to turn a profit, but who needs profits when the majority of China’s wind-power capacity is funded and operated by state-owned power companies. The only thing these companies worry about is meeting the government’s renewable-energy capacity targets. What does all this have to do with aluminium? For now, nothing. Wind variability makes it a completely unacceptable option for powering aluminium smelters. Although, back in January, Alcoa and China Power stated they would invest $7.5 billion of clean-energy and smelting projects to develop wind- and solar-energy projects in the next few years. Sounds good to those of us who are tree-huggers, but until the inconsistent supply of wind can be managed, smelters will continue using more reliable sources.
The wind energy industry has a ways to go in terms of development and efficiency, but this is contrary to what we’re hearing in China. Funny how no one is ever too keen to nay-say a national priority. Thus, for the time being, it’s everyone on the turbine bandwagon. And why not - as long as the government continues to subsidize the entire industry. China is confident that wind power can achieve commercial viability within 8 years. At that magical moment in 2020, the costs of wind-generated electricity at prime sites (side note: onshore prime sites appear to be dwindling) will instantly become on par with costs for coal-fired power. Nothing wrong with optimism, but thousands of turbines have yet to be connected to the grid due to limited system flexibility.
Just how long will it take China to replace the old system with a smarter electricity grid while at the same time minimizing west-to-east energy transportation costs? The answer lies in the successful implementation of cross-country ultra-high-voltage transmission lines. A large chunk of China’s upcoming grid investments will be made in these transmission lines (a fine time to invest in China’s power equipment manufacturers!) which use aluminium alloy as the primary conductor material. When it’s all said and done, developments in any of the energy industries have a varying degree of affect on the aluminium industry making even hot air a topic of interest for us.
Reports are coming in that the calciner in Huizhou, which is rated at 400,000t per year, has been stopped due to environmental nonconformances.
We understand it has exceeded limits on SO2 emissions. A refinery spokesman said the calciner would not be restarted until it met the regulations.
This may have an impact on CPC price and perhaps on anodes. That CPC was sold into the domestic market, mostly as a blend coke.
the extent of the impact on price and on supply will only be known once it becomes clear how long the calciner will be down for. It is not clear at this stage whether the closure is because the plant temporarily wandered from normal production standards, or whether environmental regulations have been recently tightened to the point that the calciner is now outside the limits.
We will bring more information as it becomes available.
Yesterday I joined a Reuters Base Metals forum, where I was interviewed by Andy Home. We discussed the outlook for 2011 and 2012, in terms of demand, supply, Government intervention and metal price.
The discussion then went to the question of who might buy Pacific Aluminium. Although I said much the same as I had written in my previous post (see here), that conversation prompted me to consider the question further.
A couple of additional thoughts therefore. As to who might buy the company, or at least take a controlling interest if RT goes the IPO route, I suggested to the Reuters forum that perhaps Rusal could be a candidate. Today, I realise that to look for buyers, you need to look outside the usual producers, be they Chinese, Russian or others. Given that the metal is in the Asia Pacific region, one company who might be tempted, cashed up as they are, is Glencore. Taking all those metal units will give them control of premiums and a lucrative market in Japan and elsewhere. So it isn’t just a question of the value of the assets. Perhaps the real question is the value of the metal units.
Another question is, will RT sell the new company in one job lot, or will they be forced to sell individual pieces? This is a difficult call, because finding a buyer who can stump up the billions might take more time than selling each plant separately. But the problem is the alumina supply. Without Gove as part of the company, the smelters would be stranded for their alumina. As soon as you unhitch Gove from the downstream smelters, those smelters lose value quickly.
Finally, one reader wrote to me with a couple of comments which I thought were very good. He picked up on my comment about selling the assets. He pointed out that RT bought the assets at the top of the market, and now propose to sell them when the world is edging closer to another financial precipice and metal prices are down to $2100. He wondered how the RT MD can keep his job, buying high and selling low.
Second, he disagreed that it’s a good thing for Rio to get back to digging things out of the ground. With 80% of their earnings coming from iron ore, the divestment of aluminium increases their dependency, or the risk factor for RT’s shareholders.
I am delighted to get his comments, but if you would like to make a comment on anything in the blog, please go to “leave a reply” at the bottom of the screen.
Thomson Reuters has invited AZ China to an online Q&A forum later today. Topics to be covered include:
China is the key swing producer for the aluminium market: the world’s biggest consumer but also its biggest producer. How is China’s tightening policy impacting production and demand, and is there any scope for China to become a net importer? Will it look to extend its buying spree abroad, and if so how do Rio Tinto’s assets — which it slung a for sale sign over this week — measure up?
To participate, register on the Reuters website. The live Q&A begins 0900 GMT (1000BST) on Thursday Oct. 20. If you’re not a Thomson Reuters member but curious about the topics we’re covering today, leave us a comment below.
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