Quebec Approves Rio Tinto/Alcan Deal: Rio Tinto’s proposed acquisition of Alcan moved a step closer to completion in early August when the government of Quebec agreed that the offer respects the terms of the Continuity Agreement between Alcan and that government signed in 2006 as part of a $1.8-billion investment program for the Saguenay-Lac-Saint-Jean region of Quebec. For the purposes of the agreement, Alcan agreed that in the event of a proposed acquisition of control its board of directors would only approve a prospective acquirer who met necessary requirements in terms of Alcan’s ongoing commitments to the economy and society of Quebec. The government agreed that Rio Tinto meets those requirements.

Alcoa Takeover Speculation Cools: Meanwhile, speculation that Alcoa would become an immediate takeover target following its failed bid for Alcan cooled considerably, as did price of the company’s shares, down nearly 30% from around $47 per share in mid-July to $33 in mid-August. Reports that BHP Billiton would bid for Alcoa appeared to have been, at a minimum, premature.

The mid-July to mid-August period was not kind to stock markets in general or to metals-company share prices and metals prices in particular. The LME aluminum price dropped about 14% from around $2,800/mt to $2,400/mt over that timeframe, and the Dow Jones Industrial Average, of which Alcoa is a component, fell about 7% from 14,000 to 13,000. BHP Billliton’s share price was off 17% during the period, down from around $67 to $55 per share.

Still, Alcoa’s share price performed considerably worse than most, and informed commentary leaned toward a consensus that the company would not survive as in independent entity.

Alcoa also announced that it had begun to re-start one line at its Tennessee Operations aluminum smelter, after that line was idled due to a direct lightning strike in a severe electrical storm in mid-April. The potline, which produces approximately 107,000 mt/y, was expected to be fully operational in late June. The potline was completely “frozen” after the lightning strike and each of the 164 pots had to be dug out and repaired. It was initially expected that the re-start would take several months.

The company also reduced output at its Rockdale, Texas, aluminum smelter during refurbishment of the anode baking facilities. A line has been temporarily curtailed due to lower production of quality anodes. According to Alcoa, a refurbished bake furnace has now been started, anode quality has been restored and pots are being restarted. This restart is scheduled to be completed during the fourth quarter of 2007.

Perhaps the most concrete news from Alcoa during the July-August period was its August 15, 2007, announcement that Klaus Kleinfeld, most recently president and CEO of German electronics and industrial conglomerate Siemens AG, had been elected president and CEO of Alcoa. Kleinfeld has been on Alcoa’s board of directors since 2003 and will retain his board position. He will be based in New York and assume his new responsibilities on Oct. 1, 2007. Kleinfeld, 49, is expected to succeed Alcoa chairman Alain Belda, 64, when Belda retires. However, no specific date has been set for Belda’s retirement.

Qatalum Smelter Gets Go-Ahead: Qatar Petroleum and Norsk Hydro announced that they expect to begin construction of their jointly owned Qatalum aluminum smelter in Qatar in November 2007. The plant is scheduled to begin production in late 2009 and to reach its initial capacity of 585,000 mt/y in 2010. Long-term alumina supply contracts are already in place with Norsk Hydro and third party suppliers.

The Qatalum plant will be the largest primary aluminum smelter ever built in a single phase of construction. The cast house will be capable of producing value-added products such as extrusion ingot and primary foundry alloys. Production will be marketed through Norsk Hydro’s global network.

Capital investment to build the Qatalum smelter will total about $4.8 billion, including $1 billion for a dedicated, 1,250-MW, gas-fired power plant. Operating costs are expected to be among the lowest in the aluminum industry. Assessment of the project’s profitability was based on a long-term aluminum price of $1,800/mt.

The project also includes a dedicated port and housing for up to 1,100 employees. The site layout provides for future expansion of capacity to as much as 1.2 million mt/y of aluminum.

Truls Gautesen, a Norwegian national and long-time Norsk Hydro employee, is general manager of Qatalum Ltd. Approximately 200 specialists from Norsk Hydro’s global organization are expected to participate in the project at the time of the startup.

“Qatalum is part of Qatar’s strategy to further develop its natural gas reserves by building a portfolio of diversified projects through joint-ventures with world class partners,” Qatar’s Deputy Premier and minister of energy and industry H.E. Abdullah Bin Hamad Al-Attiyah said.

Rio Tinto in Malaysia Smelter Pact: Rio Tinto and Cahya Mata Sarawak (CMS), a Malaysian conglomerate, have signed a heads of agreement for proposed development of a 550,000-mt/y aluminum smelter in the state of Sarawak, Malaysia. Detailed feasibility studies for the design, engineering, construction, commissioning, and operation of the smelter will take between 12 to 18 months to complete. The initial participating interests in the project will be 60% Rio Tinto Aluminium and 40% CMS. The project will be known as Sarawak Aluminum Company (SALCO).

The SALCO smelter is expected to draw power from the Bakun hydroelectric dam, currently under construction. First production could be on stream by the fourth quarter of 2010. Current planning includes considerations for eventual expansion of capacity to 1.5 million mt/y. The heads of agreement provides for the training of Malaysian nationals at overseas smelters and educational institutions, as well as for skills development and training in Sarawak.

Sarawak state has ample energy resources in the form of oil and natural gas, coal deposits and hydro power from river systems. At the signing of the heads of agreement, Sarawak Chief Minister Pehin Sri Abdul Taib Mahmud said development of the aluminum smelter would be the catalyst for a new phase of growth of Sarawak’s economy based on energy-intensive industries.

CMS is Sarawak’s largest company in infrastructure development, with business interests in construction, road maintenance, cement manufacturing, quarrying, construction materials, and property development. The group is also involved in trading of construction materials, technology, education and financial services.

Guinea Alumina Feasibility Study: Guinea Alumina Corp. expects to complete the feasibility study for its Guinea bauxite mine and alumina refinery, formerly known as the Sangaredi project, by year-end 2007. The company is a joint venture formed in May 2007 and owned one-third by Global Alumina, one-third by BHP Billiton, one-quarter by Dubai Aluminium, and one-twelfth by Mubadala Development Co. Mubadala is a wholly-owned investment vehicle of the government of the Emirate of Abu Dhabi in the United Arab Emirates. BHP Billiton has entered into a services agreement with the joint-venture company for development, construction and operation of the project.

Pending completion of the feasibility study, the Guinea project is based on an assumed initial capacity to produce 9 million mt/y of bauxite and 3 million mt/y of alumina. The project’s mineral resource is reported at 233 million mt of bauxite, grading 39% available alumina and 1% reactive silica. The refinery site is located about 100 km inland from the port of Kamsar.

Early works construction is already underway for the project, including clearing of the refinery site, earth works for the rail spur from the main line to the refinery site and installation of a new bridge at Boké to remove the only existing road transportation bottleneck for heavy construction loads from Kamsar to the refinery site.

Capital cost to develop the Guinea Alumina project is estimated at $3.2 billion. Production is expected to begin in 2011. Dubai Aluminium has entered into a long-term purchase agreement for alumina produced at the refinery.

Aurukun Project Clears Key Hurdle: Aluminum Corp. of China (Chalco) cleared a major hurdle toward development of its $3-billion Aurukun bauxite/ alumina project in Queensland Australia, with the signing in August 2007 of an Indigenous Land Use Agreement with the native title holders and the Aurukun Shire Council. Signing of the agreement allows Chalco to proceed with the feasibility study and environmental, social, and economic impact assessments for the project. A large number of local, state, and Australian commonwealth agencies will be responsible for considering approvals for the project, so the approvals process will be complex.

As it stands, the Aurukun project includes:
• Development of a mine at Aurukun, with capacity to produce 6.5 million mt/y of dry beneficiated bauxite.
• Construction of bauxite loading facilities, including a jetty, a wharf and associated port facilities at Boyd Point north of Aurukun to accommodate 70,000-mt Panamax vessels.
• Shipment of bauxite from the Aurukun mine to a 2.1-million-mt/y alumina refinery to be built at Townsville, Bowen, or Gladstone on the east coast of Queensland. Location of the refinery will be determined as part of the feasibility study.
• Construction of the refinery and related facilities, including residue storage and bauxite/alumina handling and port facilities.

The project is expected to create 2,300 jobs during a three-year construction period and more than 600 permanent jobs in Queensland.

RUSAL Modernizing Bratsk Smelter: Russian aluminum producer UC RUSAL has started work on a $350-million modernization project at its Bratsk aluminum smelter in the Irkutsk region of southeastern Siberia. The smelter is currently the world’s largest, with capacity approaching 1 million mt/y of aluminum metal.

The primary aim of the Bratsk modernization project is to reduce the smelter’s environmental impact. Overall hazardous emissions are expected to be reduced by 40%, including a 30% reduction in benzopyrene emissions and a 17% reduction in hydrogen fluoride emissions. Elements of the program include:
• Equipping of reduction cells with alumina point feeders to better seal the cells and significantly reduce emissions.
• Installation of 24 dry scrubbers to ensure up to 99% fluoride collection.
• Installation of 64 new reduction cells in 16 potrooms, resulting in a 100,000- mtpy increase in aluminum output.
• Modernization of air supply systems.
• Replacement of electrical equipment.
• Introduction of automated process control systems in all potrooms.

RUSAL will complete a similar modernization program at its Krasnoyarsk smelter this year. On completion of the Bratsk project in 2011, RUSAL plans to undertake a second stage of modernization at both smelters, including upgrades of reduction cell structure and transitions from dry anode to colloidal anode technology. These changes are expected to bring about an average triple reduction of hazardous emissions.

RUSAL emerged in its current form in March 2007, following completion of a three-way merger of Russia’s two largest aluminum producers, Rusal and Sual, and the aluminum assets of Glencore International.