NALCO to hit market after Budget

The disinvestment of NALCO which could fetch INR 1,400 crore to the exchequer is likely to hit the market during the first week of March after the Budget to ensure it is not impacted by volatility in the stock markets. Sources said that the department of disinvestment will start roadshows in Singapore, Hong Kong, Japan, US and UK on February 19 for disinvestment of the state run aluminium company. The roadshows would conclude on February 25th 2013. Nalco disinvestment will happen only after the Budget. There is lot of volatility in the markets before the Budget and hence we have decided to schedule it in the beginning of March. The Budget is to be presented in Lok Sabha on February 28th 2013.
The 12.5% stake or INR 31.31 crore share-sale of NALCO is expected to fetch around INR 1,400 crore to the exchequer at the current market price. Shares of NALCO closed at INR 47 up 0.75% on the BSE. The government currently holds 87.15% stake in NALCO. The government had in November 2012 deferred disinvestment of NALCO citing poor Q2 performance which raised valuation concerns and said the stake sale would happen only after the Q3 results. The aluminium major reported a more than two fold jump in its October to December quarter net profit to INR 118.94 crore on the back of improved sales. NALCO had a profit of INR 51.22 crore in the same period last fiscal. Sources said that they expect to get good valuation of Nalco. Last time, merchant bankers advised the deferment of the offer to the March quarter. This time they want to do it only when the market is stable.

  China aluminium stockpiles reach new high

China's aluminium inventories reached a record high this week caused by rapidly growing supply and weak demand in the country. The country's overall aluminium stockpiles climbed to 1.25 million tonnes almost double the level during the same period late year. Mr Li Xun analyst said that On January 10th 2012, this stood at about 700,000 tonnes. The excessive supply in China's aluminium industry will continue at least for the H1 of the year. He said that the aluminium price will fall by CNY 200 per tonne to CNY 300 per tonne during this week. That is considered a dramatic price drop in the market.

  Gulf aluminium industry poised to become a primary production powerhouse

The Gulf aluminium industry is poised to become a primary production powerhouse of the metal following USD 55 billion investment in new smelters and existing projects to boost the output capacity. According to major industry players, the UAE remains on front with USD 22 billion investment in its aluminium industry followed by Saudi Arabia, Kuwait and Qatar. They said that four of the top 10 primary aluminium producers in the world will be from the Gulf region and they will be accounting for about 15% of the total world production by 2014. Major groups in Saudi Arabia and UAE are executing multi billion dollars projects that will increase aluminium output from 3 million tonnes to 5 million tonnes by next year. Saudi Arabia's USD 10.8 billion Maaden project and the USD 4.5 billion phase II expansion of Emirates Aluminium will impetus the growth in the region's industry.
Mr Saeed Fadhel Al Mazrooei president and CEO of Emal said, “The Big Five Gulf smelters Alba, Dubal, Emal, Sohar and Qatalum recorded significant developments and achievements in recent past. With 3.6 million tonnes of aluminium produced in 2011, Gulf production is expected to increase to 5 million tonnes by the end of 2014, upon completion of Emal phase two expansion and other Gulf smelter projects.” He said that almost 80% of the aluminium produced in the Gulf is exported to different parts of the world, firmly placing the Gulf in a prominent position to meet both local and global demand.
Frost & Sullivan said that aluminium production in the GCC is expected to grow significantly in the short to medium term. The region is expected to contribute around 15% of the total global production of aluminium by 2015. The UAE aluminium capacity is expanding further with Emal's second phase expansion plans to raise its total annual output to 1.3 million metric tonnes. Frost & Sullivan expects this to drive the growth of exports in the near future. Aluminium exports from the UAE had shown YoY increase of 102% in the H1 of 2012. Aluminium exports are expected to be robust in the future as well thereby becoming one of the key non oil industry sector in the UAE. A number of new aluminium smelters and manufacturing companies were established in Saudi Arabia, UAE and other countries to drive growth and establish the region as a major player in the global aluminium industry.

  Union Tribal Affairs Minister raises concern over mining in Visakhapatnam

Mr V Kishore Chandra Deo Union Tribal Affairs Minister has written a letter to the Mining Ministry for cancellation of all such licences in Andhra Pradesh that taking a firm stand against bauxite mining in tribal areas of Visakhapatnam. Mr Deo said that silence in the matter will further aggravate apprehensions of tribals living in areas where bauxite mining by some companies was underway. Mr Deo categorically mentioned the permits and MoUs signed between Andhra Pradesh government and some companies for bauxite mining in Visakhapatnam. He said, “I request Mr Patel to have the requisite communication sent by his Ministry to the Government of Andhra Pradesh to revoke and cancel the impugned MoU which are ultra vires the Constitution. I shall appreciate a communication from you in this regard.”
Mr Deo blamed the threat of mining among people for the dismal law and order situation in these areas which had affected normal governance in these regions. No purpose will be served by letting an impugned order hang in the air. On the contrary, silence on this issue will only create more confusion and further aggravate the apprehensions of the local tribals in these very sensitive areas. Last year, Deo had revoked the mining lease agreements and MoUs for Andhra Pradesh after Governor E S L Narsimhan did not act on his suggestions to do so. Since the governor chose to abdicate his authority, I was constrained to direct the state government of Andhra Pradesh to revoke the impugned MoUs which were ultra vires the Constitution by invoking the powers that have been endowed to the central government under clause three of the Constitution. Mr Deo said that Prime Minister Mr Manmohan Singh had held a meeting to discuss the mining issues and the bauxite mining in Visakhapatnam were also discussed there. The MoUs which were signed are in blatant flagrant violation of the all above mentioned constitutional and statutory provisions.

  Hindustan Copper Q3 net down by 4pct at INR 76 crore

Hindustan Copper reported a 4.17% decline in its net profit at INR 75.84 crore for the quarter ended December 31st 2012 as it was hit hard by nearly 10% slump in sales. The Kolkata based copper producer had reported a net profit of INR 79.14 crore in the corresponding period of the previous fiscal. Net sales of the company slumped by nearly 10% to INR 310.73 crore during the quarter vis a vis INR 344.58 crore of the October to December period of FY 2012. The company's results were also boosted by 2.84% increase in other income, mainly interest on deposits at INR 69.54 crore during the quarter. Besides the total expenses amounted to over 86% of its net sales. In a separate statement, the company said that its copper ore production was 8.92 lakh tonnes during the quarter up 7.5% than previous quarter. The Board has also approved the award of EPC contract for re opening and expansion of Rakha mine to the Consortium of Kopex Shaft Sinking Company, Poland and India Resource Limited, Australia at the cost of INR 259.91 crore. The capacity of Rakha mine has been designed to produce ore at the rate of 1.5 million tonnes per annum.

  Nalco plant gets energy management certification

The 1200 MW Angul (Odisha) thermal power plant of National Aluminium Co Ltd (NALCO) has been certified under the Energy Management System. The captive power plant, located near the company's aluminium smelter, has been certified to the ISO 50001:2011 by Det Norske Veritas (DNV), a Nalco release said. The public sector company has installed various systems at its power generation plant under the Clean Development Mechanism (CDM), including installation of a continuous blow down heat recovery system and a pilot-cum-demonstration project for carbon sequestration by algae for managing and storing carbon dioxide.

Sterlite Copper lines up INR 3300 crore investments in next 2 years

Vedanta Group Company Sterlite Copper has lined up investments of about INR 3,300 crore over the next 2 years which includes expansion of copper smelter and power plants at Tuticorin in Tamil Nadu and setting up a new desalination plant in the region. Mr P Ramnath CEO of Sterlite Copper Vedanta Group Company said , “Expansion of our plant is on the cards. It is actually a Brownfield expansion activity. We have planned to double our capacity of copper smelters to eight lakh tonnes at our plant in Tuticorin. Opportunities and Challenges in Manufacturing Sector organized by the CII. With the expansion activity, he said the company would increase the job creation in the locality from the present 3,500 to 5,500 people and indirect jobs of 20,000 to 35,000 people over the next 2 years.”
Mr Ramnath later said that funding for the Brownfield expansion would be raised through internal accruals. The current capacity of our plant at Tuticorin is 400,000 tonnes per annum. Once the zero date is fixed it will take 2 years time to complete the project. He said that the expansion would happen in its 400 acre facility at Tuticorin. On the 160 MW power plant the investment made into it was INR 600 crore and the first unit with a capacity of 80 MW was already operational. We have already connected 15 MW to the Grid adding the second unit is expected to commence operations shortly.

  Aluminum fees for Japan seen rebounding on stimulus demand

Aluminum buyers in Japan, Asia's largest importer will probably agree to pay near record fees next quarter as demand recovers from a three year low on economic stimulus. Three executives said that fees for the three months starting in April may rise about 2% from USD 240 to USD 245 per tonne over the London Metal Exchange cash price this quarter representing buyers and suppliers before negotiations next week. They asked not to be identified because the deals are private.
Fees more than doubled in 2012 and reached a record of USD 255 in the Q4 boosted by surging premiums in Europe and the US Demand from Japanese fabricators will recover this year from the lowest level since 2009 as economic stimulus by Prime Minister Mr Shinzo Abe will bolster exports, investment and consumption. Mr Koji Iida head of statistics at the association said, “A weak yen is expected to boost demand from export- oriented manufacturers. Demand growth will be also led by the construction sector as consumers may rush to buy houses before the government starts to increase the sales tax next year.” Japan's shipments of rolled aluminum products will probably exceed 2 million tonnes this year after dipping 0.5% to 1.98 million tonnes in 2012, the smallest volume in 3 years, Shigenori Yamauchi. Japanese mills buy the metal from smelters such as Alcoa Inc and Rio Tinto Group for fabrication.
Abe won an agreement from the Bank of Japan (8301) last month to double inflation target to 2% weakening the Japanese currency to an almost 3 year low against the dollar. The government has given top priority to ending deflation to revitalize the third largest economy and to prepare conditions for doubling the sales tax to 10% by October 2015. Toyota Motor Corporation raised its profit forecast to 5 year high on February 5 as a weaker yen made Japanese products more profitable overseas. The company also raised its forecast for deliveries by 100,000 vehicles to 8.85 million units for the fiscal year ending in March. The auto industry is the biggest user of rolled aluminum products in Japan after the construction and can manufacturing sectors. Housing starts in Japan climbed 10% in December, the fourth month of increase, backed by government incentives. Mr Lloyd O'Carroll an analyst at Davenport & Company said that smelters are reluctant to reduce fees to Japan as premiums in the US are rising on demand recovery. The so called Midwest premium will average a record 12.5 cents a pound in 2013, rising from 9.9 cents in 2012.

Chile metallurgical and metal mechanics sector forecast to see growth in 2013

Chile's metallurgical and metal mechanics sector should see a slight recovery this year after output increased by just 0.1% in 2012. Mr Gastón Lewin president of sector association Asimet said that Asimet is expecting growth of between 4% and 5% for 2013 as importation issues with neighboring countries, namely Argentina are resolved. Mr Lewin said that "Some issues are being resolved with countries that are major destinations for our industry, such as Argentina. Imports on their side and exports on our side are ramping up and that is going to allow for more growth in the sector this year."
Mr Lewin said that furthermore, both Argentina and Brazil are facing a more positive economic outlook this year and this will benefit the sector in Chile. This is especially important because 64% of the sector's exports of manufactured products which excludes copper scrap and waste go to other Latin American countries. He said that Argentina is expected to grow between 1.5% or 1% this year compared to last year. The expectations for Brazil are also looking better for us and in general the markets we have in Latin America seem somewhat less impacted by the economy than more mature markets," such as Europe.

KCM plans to increase copper production

Konkola Copper Mines will develop 2 large declines tunnels to access new ore bodies at Nchanga underground mine to produce between 6,000 tonnes and 7,000 tonnes of copper in the initial stage. Mr Jeyakumar Janakaraj CEO of KCM said that development of tunnels will start next month with trail mining expected to commence next year. We have decided to do two large declines to access new ore bodies. The project is currently at development stage and will start the development next month while trail mining will start in the next one year. We expect to get between 6,000 tonnes and 7,000 tonnes of copper in the 2013 to 2014 financial year.
Mr Janakaraj said at a press briefing in Lusaka recently that about 500 jobs are expected to be created during the initial stage. The project will significantly enhance copper production as part of KCM's strategy of extending mining lifespan. Increased copper production remains critical for the mine, which produced about 123,000 tonnes in the last nine months of KCM's financial year. He said that we remain focused on increasing volumes and growing the mine and ensuring that every US dollar comes back in the country for re-investment.
KCM has in the last 5 years paid more than USD 500 million in taxes to Government. Its taxes and other royalties are expected to increase further as copper output increases. Meanwhile, Mr Janakaraj has reiterated the mining firm's commitment to uphold good governance practices in its quest to contribute to the economic development of the country. Our focus is extremely governed by good practices. We have informed Government of all our transactions and have never hidden our revenues because it is not our cup of tea.

KLTM tin price closes unchanged at USD 24880 per tonne

Tin price on the Kuala Lumpur Tin Market remained unchanged at USD 24,880 per tonne due to a correction on the London Metal Exchange. Many said that tin price on the LME eased USD 70 to USD 24,830 a tonne. The market remained quiet as both buyers and sellers remained on the sidelines as they were cautious over the China market. They said that China's market is closed the whole week for the Chinese New Year holidays. Bids amounted to 40 tonnes against 45 tonnes offered by sellers in the early trading. Turnover dwindled to 40 tonnes from 41 tonnes, with Japanese, European and local traders dominating the market. The premium between the KLTM and the LME widened to USD 480 per tonne against USD 410 per tonne.

Codelco Chilean copper production drops by 5pct in 2012

Codelco, the world's largest copper producer, saw its overall copper production drop by 5.1% in 2012. It carried the company to its lowest production levels since 2008. Cochilco said that the amount of extracted copper by the Chilean company decreased from 1.74 million tonnes in 2011 to 1.65 million in 2012 representing a decrease of almost 89,000 tonnes. The results only take into account the production of the mines entirely owned by Codelco, which include Chuquicamata and Radomiro Tomic, Salvador, Andina, El Teniente and Gabriela Mistral.

China 10 nonferrous metal output up 9.3% in 2012

The combined output of the ten nonferrous metals rose 9.3% YoY to 36.91 million metric tons last year, slowing from a 10.6% growth in 2011. The output of primary aluminum grew 13.2% YoY to 19.88 million metric tonne in 2012, and that of refined copper hit 6.06 million metric tonne, increasing 10.8% YoY. The output of lead rose 9.3% YoY to 4.65 million metric tonne and the output of zinc saw decline of 5.6% YoY, reaching 4.85 million metric tonne. The nonferrous metal industry realized CNY 155.8 billion in profit, reflecting a decline of 8.9% YoY. The profit of nonferrous metal mining and dressing sector fell 5.1% YoY to CNY 41.1 billion, while that of the nonferrous metal smelting sector plunged 34% YoY to CNY 39.3 billion. The nonferrous metal rolling processing sector's profit was CNY 66.6 billion last year, up 12.9% YoY.

Antamina set to produce 450000 tonnes copper this year

Peruvian miner Antamina produced about 450,000 tonnes of copper in 2012 and expects similar output in 2013. Mr Abraham Chaun CEO of Antamina said that the company will invest USD 1.3 billion this year to increase output about 30%. In 2011, Antamina produced 333,700 tonnes of the red metal or 28% of Peru's total copper output. The mine, one of the world's biggest copper-zinc pits is run by a group of miners including BHP Billiton, Xstrata, Teck and Mitsubishi.

Norsk Hydro sees opportunities in Brazil bauxite exports

Norwegian aluminum producer Norsk Hydro sees interesting opportunities in China's growing import markets for bauxite and alumina while global markets for aluminum metal remain oversupplied. Mr Svein Richard Brandtzaeg CEO of Norsk Hydro said , "China's still short on bauxite production. We have exported bauxite from Brazil in (the) Q4 2012 sending shiploads not major volumes. It's an interesting market for us." Production and sales of bauxite ore and alumina, the raw materials for aluminum production helped Norsk Hydro swing back to profit in the Q4 offering sales opportunities in perennially oversupplied markets for aluminium which have depressed prices. Norsk Hydro moved into bauxite production in 2011 when it purchased control of the major Paragominas mine in the Brazilian Amazon from Vale SA as part of a deal that also included Vale alumina and aluminum assets. Mr Brandtzaeg said ,"The unit cost is secret but he indicated that sales are worthwhile at current freight costs of around USD 30 per tonne to ship the ore to China. China's bauxite reserves are low and the Asian giant has sought more supplies of the ore on global markets due to restrictions on exports from Indonesia. He said that output at Paragominas mine, the world's third largest bauxite mine, has grown 42% since Norsk Hydro became a co owner from improvements at an ore concentrating plant and production should reach 9.3 million tonnes this year. The ore is used to supply the company's Alunorte alumina plant in Brazil, with some surplus for export. China is also increasing alumina imports, with its net imports having risen to around 5 million tonnes in 2012 from some 2 million tons in 2011.

Xstrata updates on zinc production

Total zinc in concentrate production was slightly higher in 2012 than in 2011. Our Australian operations achieved record volumes in 2012 with an 8% increase in zinc in concentrate production compared to the record volumes reached in 2011. The higher Australian volumes offset lower output at our Brunswick and Perseverance mines in Canada which was mainly due to lower grades as ore reserves approach the end of their lives and lower zinc production at Antamina where the mine plan continues to operate in a predominantly copper ore zone.
Refined zinc metal production at our smelters was in line with 2011 volumes. Total lead in concentrate production increased by 9% compared to 2011 mainly as a result of record volumes of lead in concentrate production at Mount Isa Mines. Improved lead ore grades at our Australian operations more than offset lower head grades at our Canadian operations. Total refined lead metal production was 12% higher than 2011 boosted by higher lead production at our Mount Isa operations and improved shipping schedules for lead bullion to our UK lead refinery.

Budget disappoints copper industry

The Union Budget announced by the Finance Minister P Chidambaram disappointed copper industry with no change in duty structure. The industry had asked for bringing pricing of eco-friendly copper cathodes at par with copper concentrates by slashing import duties in the Union Budget. The industry had urged the Ministry of Finance to reduce duties on import of copper cathodes and make them at par with the duties on copper concentrates, to boost the local copper industry, said TDT Copper President and Indian Copper Development Centre (ICDC) member Avinash Ladha. Currently, the tariff duty applicable on import of copper cathode is 5 per cent ad valorem, while copper concentrate attracts no duty. In their Budget wish-list, green energy experts requested the Centre to explore the 'shared energy' or 'embedded energy' concept when it comes to importing metals such as copper & aluminium and allow metals at pure metal stage. Ladha said importing copper cathode is more eco-friendly. Conversion of copper concentrates into copper cathode is not eco-friendly as it contains 98 per cent copper content. There is a demand for copper cathodes, when imported, to be allowed preferential import duty treatment, as is already available to import of copper concentrate from abroad. He said importing cathodes rather than concentrates tantamount to "importing pollution".

US regulator approves BlackRock copper ETF plan

BlackRock Inc has got approval from the US securities regulator to list a copper backed exchange traded fund, potentially getting the jump on JPMorgan whose listing of a similar product has been delayed by industry objections. The US Securities and Exchanges Commission approved a proposed rule change to list and trade shares of the iShares Copper Trust on NYSE Arca. The launch of copper ETFs will potentially allow large US based funds easier access to the copper market, but some end users are concerned that such products would remove a large chunk of the metal from the market and inflate copper prices.
JPMorgan Chase & Company's rival product was approved about two months ago, but it has not yet listed due to objections from some in the copper industry. Still, the impact on prices is expected to be limited, given slowing demand growth in top consumer China, which has taken much of the heat out of commodities and as copper supply is expected to exceed demand this year. BlackRock's copper ETF would take up to 121,000 tonnes of copper as guarantee against shares in its fund while JPMorgan's fund would store around half that amount with copper valued at up to USD 499,761,150 equivalent to about 62,000 tonnes based on a copper price of USD 8,000 per tonne. Mr Zhang Ao an analyst at Jinrui Futures in the southern city of Shenzhen said , "If the fund buys the maximum holdings at one go, it will push up premiums on physical material for the short term but over the long run, the impact on copper prices will be limited.”

Vedanta Aluminium seeks bauxite to reopen unit

The Vedanta Aluminium Limited has asked the state government to allot small bauxite deposits for its defunct Lanjigarh refinery to resume operation. Mr Mukesh Kumar COO of VAL made a presentation here to highlight the refinery's plight and possible solution to the current crisis before a three member inter-ministerial committee headed by finance minister Mr Prasanna Acharya. Mr Kumar said that many small bauxite reserves are lying unutilized with the state government and could be made available for the 1 million tonne per annum refinery. The plant, which was set up on the assurance of the state government to provide raw material had to down its shutters on December 5th 2012 pushing a large number of families, dependent on the project for their livelihood in the remote Kalahandi district, to uncertainty. He said that the refinery is desperate to survive. They have offered an alternative solution to the government to take a view. The small bauxite deposits are with the state government. They are located in non-forest areas. There are also certain closed mines, which can be explored to meet our need.

Daily average aluminium output slips to 68000 tonnes in Jan

Daily average primary aluminium output slipped to 68,000 tonnes in January from a revised 68,300 in December. International Aluminium Institute data showed that production in January was 2.107 million tonnes versus a revised 2.116 million in December. Production last year was revised to 24.853 million tonnes down from 25.627 million in 2011.

Government undecided on HZL timeline

The mines ministry has been quoted as saying that there are lots of complex issues that need to be addressed before selling government's remaining stake in Hindustan Zinc and no time frame can be given for that. Mr Rajen Habib Khwaja mines secretary said,"These are all complex issues, which require lot of consultations. There is no yes or no type thing. I am not in a position to give you a time frame we are looking at various options. The issues include taking permission from Parliament as the company was formed through a statute. Besides, modalities of share sale need to be decided.”
The government which currently holds 29.5% stake in Hindustan Zinc, has been looking at exiting from the company and has been exploring various options, including offer for sale and e auction routes to fetch the best price. However, selling the remaining government stake requires Parliament approval as the company was formed through a statute and the Mines Ministry, the parent ministry of Hindustan Zinc has not yet decided on approaching Parliament. The Supreme Court had stayed the disinvestment of some petroleum companies in 2003 as they were formed through a statute and required Parliament approval, to become eligible for disinvestment.
Mr Durga Shankar Mishra joint secretary in the mines ministry said that same applies to Hindustan Zinc also, which has also been formed in the same way. Without Parliament approval, we cannot sell the residual stake of the government. However, the mines ministry officials remained noncommittal when asked whether they would seek Parliament approval in the forthcoming Budget session. We have to look at all the complexities (before deciding on selling remaining shares of HZL), it is not so simple.

Japan copper-alloy output drops for 3rd month on auto demand

Japan's output of copper and copper- alloy fabricated products declined 5.3 percent in January from a year earlier, slumping for a third month as demand from the automotive sector remained subdued, an industry group said.
Production, including sheets and tubes, was 56,690 tonnes last month, compared with 59,864 tonnes a year ago, the Japan Copper & Brass Association said, citing preliminary data. Output totaled 56,997 tonnes in December, down 5.7 percent from a year earlier. Japan's trade deficit swelled to a record 1.63 trillion yen ($17.4 billion) in January on energy imports and a weaker yen, highlighting one cost of Prime Minister Shinzo Abe's policies that are driving down the currency. Exports gained 6.4 percent last month from a year earlier, the first advance in eight months, while imports rose 7.3 percent, the Finance Ministry said on February 20. Demand from the auto and semiconductor industries continued to slow, said Keizo Tani, research manager at the association. “Overall sentiment was still subdued.” The country's output of the copper products totaled 768,938 tonnes in 2012, down 6.7 percent from 824,431 tonnes in 2011. That was the second straight annual drop and the lowest level since 2009.
The Japanese currency has fallen 13 percent against the dollar in the past three months amid Abe's calls for aggressive monetary easing to end deflation. The yen touched 94.77 recently, the lowest level since May 2010. Japan's copper wire and cable shipments dropped 2.7 percent to 54,500 tonnes in January from a year earlier, decreasing for a second month, the Japanese Electric Wire & Cable Makers' Association said on February 20. Keiichi Ohki, an official at the association's research department, said that benefits from the weaker yen had yet to be felt.

Vedanta struggles for Bauxite linkages

Vedanta Aluminium, a unit of Anil Agarwal owned London listed Vedanta Resources, is still struggling for bauxite linkage even after it was forced to close down its 1 million tonne refinery 2 months ago due to non availability of bauxite the key raw material used to produce alumina. The Naveen Patnaik government which assured bauxite supply is yet to identify a mine to rerun the refinery even as the locals cry foul demanding chief minister's intervention.