Monthly Archives: March 2012
Chinese scientists have made a breakthrough in the quest to create the inert anode. In a bizarre twist, they have discovered that the traditional anode, made of calcined petroleum coke glued together with coal tar pitch, can be made to last up to 100 days longer by the addition of the same preservatives used in McDonalds hamburgers.
“We had long noticed how a McDonalds hamburger never seems to age or deteriorate,” said Mr. Yu Renjie, head of research at the No. 4 Research Centre in Haiyang, China. “We started looking at ways of using the same preservatives in a wide variety of applications.”
The preservatives are used as a binder in the anode, replacing the coal tar pitch that is normally used. “These preservatives can bind people over, so we thought, why not use them as a binder in anodes,” said Mr Yu.
Early field trials in the reduction pots in the laboratory suggest that the McAnodes, as they will be called, can last up to 4 months, much longer than the anodes they will replace. “We couldn’t run the experiment any longer,” said Mr Yu, “because we all got hungry from breathing the aromas coming off the pots.”
It is expected the new McAnodes will be available this summer, though the quarter pounder will now be known as the quarter tonner.
This discovery has drastic consequences for the coal tar pitch industry, as more than 50% of their sales come from the anode industry. “We are not taking this lying down,” said Mr Ian Doggerty, Global President of Coppers, the Pitch People. “Even as I am speaking to you, the people at the Coppers, the Pitch People Research Centre are working on new applications for our products. Our head of research, Dr. Professor Robert Wobble is striking back. He is making a new pitch formulation that can be used in McDonalds hamburgers, replacing ketchup. He tells me it is a new taste sensation.”
We tried contacting the heads of Raw Materials Procurement at both Rio Tinto Alcan and at Alcoa for comment, but they were both out to lunch - at McDonalds.
The AZ China office will be open for business as usual today and tomorrow - Saturday and Sunday. But we will be closed Monday through Wednesday.
That’s because Wednesday April 4 is Qingming, or “Tomb Sweeping” Day, a public holiday in China. But rather than move it to the nearest weekend, the Chinese authorities see fit to move the weekend to the feast day. So Saturday and Sunday become work days, and Monday and Tuesday become the weekend for this week only.
It’s a quaint, infuriating custom. Businesses like ours, with most of our clients in the rest of the world, it makes no sense. But then so many things in China make no sense.
We will publish our Weekly Market Review a day or so early, so there is no interruption to delivery. The holidays do not impact preparation of our monthly Black China Report, which will be out around the 12th this month.
If you need to reach us during the early part of next week, write to me at paul.adkins@az-china.com, and I will attempt to answer your message.
Update: some readers objected to the reference to Easter, so I have removed that sentence. Apologies to anyone who was upset by the remark. Paul.
Rio Tinto Alcan has announced the cancellation of its plans to put a smelter in Malaysia. According to the press release, the company could not agree a satisfactory power contract with the Malaysian government.
Meantime, Alcoa has announced that it will delay the closure of its smelter in Italy, citing pressure from the government and from local unions.
Thanks to the readers who sent me this story. I have written to Oxbow to seek further comment.
Koch’s Oxbow Carbon lawsuit alleges ‘scheme to defraud,’ millions in loses
By Michele Dargan Daily News Staff Writer
Posted: 7:59 p.m. Friday, March 23, 2012
Bill Koch’s Oxbow Carbon has filed a lawsuit against three company executives, alleging they defrauded the company by accepting illegal bribes and kickbacks from competing companies.
The lawsuit says Oxbow Carbon and two of its subsidiaries — Oxbow Carbon & Minerals and Oxbow Carbon & Minerals International — have suffered “substantial damages in the millions of dollars.”
The three executives — one based in California and the other two in Asia — are alleged to have participated in a “wide-ranging scheme to defraud” the company and its subsidiaries. The executives, the lawsuit says, used their access to confidential information to promote the business interests of competitors for their own gain.
Oxbow Carbon, which is based in West Palm Beach, is one of the largest providers of natural gas, coal and petroleum in the world. According to the lawsuit, Oxbow is the largest distributor of petroleum coke in the world, selling significant amounts in Asia.
The lawsuit, filed Thursday in Palm Beach County Circuit Court, alleges the following:
■ Beginning in March 2009, shell companies began secretly buying petroleum coke and coal from two Oxbow subsidiaries with direct involvement from the three executives.
■ The shell companies then would resell that petroleum coke or coal at unusually high profit margins — sometimes as high as 12 times higher than that which Oxbow charged their customers.
■ The executives facilitated those purchases for the benefit of themselves and the shell companies. One of the executives “received a secretive monetary payment ($11,400) from Shell Company One for payment of school tuition for his son.”
■ The executives steered business to a freight company of a known competitor that they had been instructed by their superiors not to use. The freight company inflated the shipping rates to Oxbow’s customers and put the “overpayments” into the shell companies for the executives’ benefit.
“Shell Company One alone, with the active knowledge, assistance and participation of defendants, misappropriated at least $1.2 million in freight payments from plaintiffs’ legitimate customers.”
Update: Oxbow have replied to my email, but declined to comment further.
I read on the weekend that Royal Bank of Scotland (RBS) had slammed the China aluminium industry in their latest publication.
Apparently the note contained a strong attack, including this line:
“…once again Chinese aluminium producers have in one fell swoop managed to eradicate all the work done by other producers in cutting smelting capacity.”
Their argument was that February’s production number out of the Middle Kingdom was a 9% jump over January, to record levels, just as the rest of the world was trying to scale back.
This is wrong on so many counts.
First, it fails to acknowledge that the January number was no doubt artificially low, thanks to Chinese New Year falling in that month. Although pots don’t stop for public holidays, the office staff who have to submit the numbers do.
Second, it shows a complete lack of understanding of the history of Chinese aluminium output figures. One only needs to look at the last 5 years history, to see that February is always a bumper year for output, but also that March is always a slip on February.
The Melbourne Age newspaper has today reported that Alcoa is meeting with the State Government, seeking to secure lower electricity prices.
Alcoa announced in early February that the future of the Point Henry smelter was under review. The high Australian dollar, rising input costs and the age of the plant all conspired to make the smelter unprofitable. Australia’s carbon tax- set to be introduced mid-year is a contributing factor, though local Alcoa officials refused to blame the tax directly. See here for the original announcement.
But the article stops short of confirming the headline. The body of the article mentions that Alcoa would not comment on its discussions with suppliers, but that “well-placed sources” confirmed that the company was negotiating with the Government.
You have to worry when a newspaper quotes well placed sources in a matter that the typical journo knows little about. The risk of being fed mis-information, and swallowing that information, rises exponentially.
The Government faces a difficult economic and political challenge, if indeed they are considering reducing the electricity price. The Government must weigh the cost of loss of revenue from sales of electricity with the cost of unemployment (actually a federal cost), but also the implications from the political angle. Cutting the price of electricity to a big multi-national when that electricity is generated from brown coal, and when that multi-national is threatening the loss of significant export revenue - Alcoa is Victoria’s largest exporter - all makes for a messy dilemma. And it comes as Australia prepares for the introduction of a carbon tax.
The further complication for the Victorian Government is whether they will be throwing good money after bad. What sort of guarantee can they extract that Alcoa won’t close the plant in any case, even with cheaper electricity, if the world price of aluminium doesn’t recover sufficiently? With a strong Australian dollar, and rising alumina prices and carbon costs, it could all be for nothing.
That may well be the worst possible outcome for the Victorian Government - to suffer the wave of criticism if they reduce electricity tariffs, only to find it was to no avail. That would cost a lot of votes.
Refusing to help is no better, but at least they would be able to argue that they were wise not to throw money at a departing multi-national.
All this however, is no help to the people faced with impending closure and loss of their jobs.
China Power Investment Corporation (CPIC) today took the wraps off their newest smelter project.
They have announced a 500KA plant for the Yili district in Xinjiang province, in China’s far northwest. The plant will have a capacity of 1.1 million tonnes, along with a carbon plant of 600,000t, and a power station with 6 * 350MW turbines. The project is only at the early stages as yet, with the Environmental Impact Statement just released, so it may still be a couple of years away.
That brings the total of “mega” plants to at least 5 inside China. Chalco already has its 500KA plant in Gansu province, and is currently building a 600KA line. East Hope is also apparently building a 500KA smelter in the same region, though they haven’t officially released the rated amperage. Jiarun’s new smelter is also expected to be 500KA. And this list doesn’t include the smelter announced this morning by Chalco. They have had their own announcement today, of an investment of $2.8 billion for a new smelter in Xinjiang, though there was no mention of capacity or amperage.
The question now is, who will be the first to break the 600,000 amps barrier? But the race isn’t between China and the other technology providers in France, North America and the Middle East. It is between the Chinese themselves - SAMI, GAMI or NEUI.
Who knows where this will end - 1 million amps maybe?
Bloomberg has this morning published an article declaring that Indonesia is to ban exports of bauxite and nickel-ore effective May 2012, a full two years ahead of the previously announced date.
The article concentrates on the nickel market, with almost no commentary on the impact on the Chinese aluminium market. But China imported 36 million tonnes of bauxite from Indonesia last year. That represents about 8 to 9 million tonnes of primary aluminium production, or about 50% of China’s metal output in 2011. That’s a big hole in the supply chain.
There are likely to be several reactions to this announcement. For one thing, alumina prices are likely to rise, as are bauxite prices from other parts of the world. Chinese capital is likely to flow much faster. The Chinese were already busy trying to develop alternative and replacement supplies. Now any project in the offing is likely to suddenly become more attractive. We may also see the more rapid development of fly ash and other technologies inside China. And a few people in Guinea are probably delighted at this news.
Sales of alumina from places like Gove are likely to increase rapidly.
But I would start by first checking the veracity of the story. The Bloomberg article talks of a ban on exports. A ban only works if you have the refining and smelting capacity to use the material yourself, otherwise you miss out completely on the export revenue. Indonesia is like all countries - the balance of trade is important for its economic health. A ban, especially at such short notice, is only going to worsen your trade position. I don’t doubt that Bloomberg has checked their sources, but it does seem strange that the Indons have taken such a step, so precipitously.
For those planning to attend our May 22-24, 2012 conference in Qingdao, we have added an optional day trip on May 25th. Our major sponsor, Sunstone, will be hosting a visit to their 300Kt anode plant in Linyi. What better way to truly understand China’s fast-growing anode industry than to see it for yourself.
Sunstone is one of China’s leading anode producers and exporters, and we are delighted that this prestigious company has joined us as our major sponsor. When you visit the Linyi plant, you will see for yourself first-hand, the reason why more and more people are buying anodes from China. This was the most talked-about theme at the recent TMS, so it is our pleasure to invite you to witness it for yourself.
The visit will take all day Friday, as it will include a bullet train and a bus each way. Lunch will be provided at the plant, and we will have you back at the Shangri-La Hotel by the end of the day. The round trip will take about 10 hours, including all travel, the plant visit and lunch. It’s also a great chance to try China’s new bullet trains!
If you’ve already registered but would like to join the exciting Friday excursion as well, please email charissa.trahms@az-china.com
Linyi, Shandong Province
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