Valco smelter to restart

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

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

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?

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

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.

China defies the experts – record metal production in June

Aluminium production in June reached 1.424 million tonnes, for a daily rate of 47,500 tonnes, according to CNIA data released today. This is a new all-time record. The previous highest daily rate was in February this year.

It is not enough that China has set a new production record. It has done so at a time when the Government is asking smelters to reduce power consumption. It has done so in a time when key aluminium sectors such as property and infrastructure are supposedly slowing down. It has done so at a time when China is actively buying scrap from the USA and Europe. It has done so at a time when the metal price was falling to well below the cash cost of production. And it has done so in defiance of all the experts (including us), who predicted that we would see a slight fall off in the June number.

For the year, China has now produced 8.2 million tonnes. That puts it on track, numerically speaking, to achieve around 16.5 million tonnes (the second half of the year has more days in it).

It is not a straight numerical equation however. On the one hand, there are still several new greenfield and brownfield projects due for completion or currently ramping up. On the other hand, the Government has asked 13 smelters in Henan Province to reduce power consumption. Add to the equation the fact that most smelters are running at a loss (we know of only two smelters that are in the black), and you begin to see how difficult it is to predict a 2010 production number.

Subscribers to our reports will get our latest estimate in our next Black China Report.