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Norsk Hydro
aluminium smelting industry
Chinalco likely to
back rio rights-issue
China’s state-owned Chinalco is likely
to participate in global miner Rio Tinto’s
USD15.2bn rights offer, in a sign
China is keen to retain its interest in
the world’s top iron ore miner. Strong
demand for the Rio offer, the fifthbiggest
on record, is expected to ease
pressure on Rio to sell assets at throwaway
prices and to give it the stability
to pursue growth amid signs that the
global economy is on the mend.
Rio is raising money to cut a
USD38bn debt mountain it accumulated
when it bought Canadian aluminium
group Alcan at the top of the
commodities market in 2007. The key
issue for Rio is to decide whether to
sell some downstream Alcan assets
now, or whether to hold them for 3 to
5 years to realise better value.
Chinalco’s aluminium relations
with Rio soured early in June after
the indebted miner called off a bigger
equity partnership that would have
seen the Chinese group invest another
USD19.5bn into dual-listed Rio Tinto.
Instead, Rio ditched the deal in favour
of the rights issue and an iron ore joint
venture with rival BHP Billiton, raising
howls of protest from China. Rio’s
21-for-40 rights issue was priced at a
steep discount of AD28.29 per Australian-listed
share and 1,400 pence
per London-listed share.
Chinalco, Rio’s top shareholder,
owns about 9% of the combined group
ALUMINIUM · 9/2009
and a full take-up of the rights would
cost it around USD1.5bn. If Chinalco
takes up its entitlement in full,
it would bring down its average holding
cost in Rio. Chinalco bought its
initial stake at 60 pounds (USD99.69)
a share in February 2008 in a raid on
the London-listed stock.
Hindalco may go slow
on aditya aluminium project
India’s Hindalco Industries Ltd may
go slow on its Aditya Aluminium
project in Orissa state, which envisions
a 1.5m tpy alumina refinery and
a 360,000 tpy aluminium smelter.
It is facing problems getting the required
land and water supplies as
well as environmental clearance. It
is unclear what the delay will be, but
mechanical completion of the plant
had been expected in 2011, and full
production by 2013. Hindalco also
plans to build two aluminium smelters
of 360,000 tpy each in Jharkhand
and Madhya Pradesh states in the
next four years. The Mahan Smelter
in Madhya Pradesh is due for completion
in late 2010, with first metal
expected in 2011. Equipment for the
captive 900 MW power plant has been
ordered, together with around 40% of
the smelter equipment.
To feed its three new smelters Hindalco
is also building Utkal Alumina,
a 1.5m tpy alumina refinery, by early
2011, with first alumina in July 2011.
C o m p a n y n e w s w o r l d w i d e
It also plans to build a 90 MW power
plant and a 2m tpy bauxite mine, and
to expand its 138,000 tpy alumina refinery
in Belgaum to 313,000 tpy in
2011. Hindalco is raising USD500m to
finance the expansions.
rio rejects Usd80m
lifeline for anglesey
as it prepares for closure
Rio Tinto Alcan will continue with
plans to close its Anglesey aluminium
smelter in Wales after it rejected a
£48m (USD79m) government bailout
on 1 July. There is no possibility of a
realistic subsidy being available, and
without a permanent power solution,
any subsidy would only provide interim
relief and would not represent
a sustainable solution. Rio has looked
at other options, but has not identified
any alternative and affordable source
of power. The 145,000 tpy aluminium
smelter is owned by Rio with a 51%
stake, and by Kaiser Aluminum which
has the remaining 49%. The Anglesey
plant employs around 500 people.
German neuss aluminium
plant stays open near term
Hydro Aluminium, the German unit
of Norwegian group Norsk Hydro, is
to keep its large German aluminium
plant at Neuss open for the immediate
future while a new German state aid
plan for metal companies is assessed.
Hydro said in April it would stop production
at the loss-making aluminium
plant at Neuss in June because of high
German electricity costs and weak
demand. But the Neuss plant will
remain in operation at its current reduced
level while the details of a new
German government plan to help the
non-ferrous metals industry are assessed.
Germany’s ruling government
coalition has decided to give extra aid
of €40m (USD55.91m) in 2009 to help
the NF metals industry overcome the
impact of the economic slowdown
and high German power costs. The
Neuss plant has capacity to produce
230,000 tpy of primary aluminium,
but is currently producing only about
4,000 tpm or about 50,000 tpy. ➝
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