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H O M E

     
NEWS ROUND UP
Altona Mining on track for first copper production from Outokumpu in early 2012

Altona Mining has exposed the Kylylahti ore body at the Outokumpu Project, an important milestone on Altona's path to copper production in Finland. First concentrate production from Outokumpu is expected in the March quarter of 2012. The initial development comprises an underground mine at the 8.4 million tonne Kylylahti copper, gold and zinc deposit. Decline tunneling at the Kylylahti mine began in early January 2011. The decline development exposed low grade ore on the plus-50 meter level at the edge of the deposit and exposed the Kylylahti ore body for the first time at a vertical depth of 150 meters. Development along the ore zone is beginning and Altona has started infill drilling of the upper levels of the mine to help plan first production. Stopping is expected to start in the June quarter of 2012 with production ramp up at the mine and the continued ramp up of concentrate production at the mill.
The mine is expected to reach full production of 550,000 tonnes per annum and positive cash flow in the second half of 2012. Ore will be trucked 43 kilometers to Altona's Luikonlahti regional processing hub. Altona has commenced refurbishment of the existing plant which treated Outokumpu-style base metal ores for more than 15 years. Altona's Outokumpu Project, 400 kilometers north east of Helsinki, lies within Finland's premier mining district. The project has declared resources of 15.9 million tonnes of copper dominant polymetallic base metal mineralization, containing 156,200 tonnes of copper and 32,300 tonnes of nickel, over the Kylylahti, Saramäki, Vuonos, Hautalampi and Riihilampi deposits.

BHP may review nickel, aluminum operations

BHP Billiton Ltd., the world's biggest mining company, may study its nickel, aluminum and alumina businesses after announcing a review of diamond operations, Deutsche Bank AG analysts said. BHP may raise as much as $10 billion from disposing of assets, should the reviews lead to sales, Grant Sporre, Tim Clark and Rob Clifford wrote in a report. This marks the start of a number of reviews of commodities / assets that also lack significant “scalability or size,” the analysts said. This will include in this category BHP's remaining nickel assets, lacks scalability from resource constraint, and its aluminum / alumina assets, lacks scalability from power constraints. BHP may sell some or all of its diamond business as the operations have limited growth and may no longer fit its strategy. Melbourne-based BHP could raise $5 billion to $10 billion from the sale of smaller assets to help fund expansions, Deutsche Bank estimated in the report. BHP may also study the sale of its 50 percent stake in the Richard¿s Bay titanium dioxide venture and the disposal of its manganese unit which could be combined with its nickel assets, Deutsche Bank said. The company remains committed to diversification by commodity, geography and customer and having the portfolio that exposes to the different phases of the urbanization and industrialization process. BHP owns 80 percent of the Ekati diamond mine in Canada's Northwest Territories and 51 percent of the Chidliak exploration venture in the territory of Nunavut, it said. The Ekati stake is valued at $2.7 billion by BMO Capital Markets using a 10 percent discount rate. Deutsche Bank values Ekati at $1.7 billion and said Rio Tinto Group may be interested in BHP's diamond unit. De Beers may face antitrust issues, preventing it from acquiring Ekati.

China Nonferrous Metal Mining to invest USD 2 billion in Zambia

China Nonferrous Metal Mining Co Ltd a large sized state owned enterprise under the State owned Assets Supervision and Administration Commission plans to invest around USD 2 billion in Zambia from 2011 to 2015. Mr Tao Xinghu Deputy General Manager said the company expects to expand operations in Zambia as well as start construction of infrastructural facilities, adding that it has injected nearly USD 2 billion into the African country. A person familiar with the matter said during the period from 2011 to 2015, The Chinese mining giant also expects to build a nonferrous metal base in South Central Zambia. China Nonferrous Metal Mining which entered in Zambian market in 1998 has set up nine branches and owns the Luanshy and Chambishi copper mines in the country.

Rio Tinto to invest to complete aluminium smelter in Canada

Rio Tinto has given the green light to an additional USD 2.7 billion capital investment to modernize its aluminium smelter in Kitimat, British Columbia. This new investment will allow for completion of the USD 3.3 billion project in 2014. The Kitimat modernisation project will increase the smelter's current production capacity by more than 48% to approximately 420,000 tonnes per year. First metal is expected to come on stream in the first half of 2014, with an expected ramp up of nine months. The modernized smelter will be powered exclusively by wholly-owned hydropower and use Rio Tinto Alcan's proprietary AP40 smelting technology to reduce the smelter's carbon dioxide emissions intensity by approximately 50%. Jacynthe Cote CEO of Rio Tinto Alcan said “The modernization of Kitimat will transform its performance, moving it from the third quartile to the first decile of the industry cost curve, and cut greenhouse gas emissions by about half.
This project draws on two of our greatest competitive advantages clean, self generated hydropower and leading edge AP smelting technology. Once completed, Kitimat will be one of the most efficient and lowest cost smelters in the world, and will be in a better position to serve the rapidly growing demand for aluminium in the Asia Pacific market." Mr Jean Simon, president, Primary Metal, Rio Tinto Alcan, said “For nearly 60 years, the smelter has been a major impetus for the economic development of northwest British Columbia. We are very proud to announce this USD 2.7 billion investment to complete the modernisation project. This is one of the largest private investments in BC's history, and it will ensure the sustainability of the aluminium business in Kitimat for decades to come." The modernisation project will secure approximately 1,000 stable, specialized jobs in B.C.'s northwest for the long term, and 2,500 jobs during the peak period of the construction phase.

Emerging market urbanization to fuel metals demand

Urbanization in emerging markets and sluggish copper mine supply will buoy copper prices over the coming years. Mr Robin Bhar metal analyst with Credit Agricole SA said that "It's the emerging economies that are growing at two, three times the rates of more mature economies that's critical for metal markets. Copper easily conducts electricity and does not rust in water leaving it in high demand by the manufacturing and construction sector. Mr Bhar said that "Urbanization will provide the boost to metal consumption we've seen over the past five years. At the same time, the copper market will see pressure from weak mine supply as existing facilities are run at maximum utilization.” He said that new copper mining projects are characterized by deeper mines and lower ore grades as well as more politically unstable regions. Mining companies face higher capital and operations costs, tighter markets for skilled labor and longer lead times for equipment. Copper is a lack of supplies story rather than fantastic demand.

Billionaire enters into mining

Britain's billionaire Reuben brothers are setting up a partnership with Transasia Minerals Holdings to tap Indonesia's coal and metals deposits, lured by the country's vast mineral wealth. The project means a return to natural resources for the siblings, who built their fortune with Russian aluminium company Trans-World Metals, but later sold out and put their money in private equity and property. The pair will buy a 30 percent stake in the venture, the Asian Metal Resources Corporation (AMRC). Transasia, which is owned by the Aslanov family from Uzbekistan, will hold the rest. Reuben Brothers has huge experience and knowledge in terms of the business of natural resources, and attracts the support of the world's largest institutions as a result. The two parties did not disclose financial details, but a source close to the two families said that the brothers would pay an initial $500 million in equity and debt, valuing the entire venture including debt at $1.7 billion. The brothers, who are making their investment through Reuben Brothers Resources, have also negotiated the right to raise their stake to 49 percent at a later stage. The deal follows Nat Rothschild's venture into Indonesia, where the banking family's scion holds 11.7 percent in miner Bumi Plc after a tie-up with the politically well-connected Bakrie family. Spread across 17,000 islands, Indonesia has some of the world's largest deposits of coal, gold, copper and tin, and there is increasing interest from investors in the strategic potential of Southeast Asia's largest economy. The joint venture between the two families will acquire and develop mining interests in Indonesia, specifically coal in Borneo, copper and gold in Sumbawa and surrounding islands, and nickel on Sulawesi. The two were born in Mumbai but made their fortune from London, where Simon went into property and his older brother David started trading in scrap metal. The Uzbek Aslanov clan is the sole owner of Jakarta-headquartered Transasia Minerals Holdings, which exploits coal, nickel, copper, iron ore and uranium in Indonesia and Africa. The partnership will also have offtake agreements, the ability to buy output, for mines owned by the Reuben Brothers. The two parties have worked together for two decades. Their most recent project is the Tuhup2 coal mine in Kalimantan, which is due to see first production soon.

Rusal completes redesigning of smelter

The world's top aluminium producer UC Rusal has finished redesigning its Volkhov smelter, Russia's first aluminium plant, built in 1932, raising its annual capacity to 32,000 tonnes from 24,000 tonnes. The VAS smelter, located 140 km east of St. Petersburg, will produce mainly A356.2 aluminium alloy used in cast automotive wheel production, RUSAL said in a statement. The company is currently negotiating with several major companies to start auto components production in Volkhov to consume VAS-produced alloys.

Dowa Holdings Co to raise copper alloy output in Asia

Dowa Holdings Co will boost production of automotive copper alloy parts in Asia under a three year business plan through March 2015. Expanding in emerging markets, mainly Asia is the cornerstone of the plan released recently. Capital investment is expected to total JPY 60 billion through fiscal 2014, up by 12% from the previous three year period. Its metal processing business, which includes automotive copper alloy, will spend JPY 11.6 billion, up by 110%, to add production lines at Chinese and Thai plants and open new facilities in Asia. Capital spending will increase 10% to JPY 18.3 billion at its environmental recycling business and 7% to JPY 7.2 billion at its heat treatment business, accelerating these operations' expansions in Asia. Meanwhile, Dowa will sharply reduce investment in its mainstay smelting business. The company aims for JPY 45 billion in group pretax profit in fiscal 2014, double the projection for this fiscal year.

Indian zinc futures recover by 1pct

Zinc tracking gains in the entire base metals pack at the London Metal Exchange, zinc prices rose by 0.86% to INR 100.25 kilogram in futures trade. On the Multi Commodity Exchange, zinc for delivery in November edged higher by 85 paise or 0.86% to INR 101.10 per kilogram with a trading volume of 773 lots. The metal for December contract also moved up by 85 paise or 0.85% to INR 101.10 per kilogram with an open interest of 211 lots. Market analysts said that apart from a firming trend in base metals on the LME, a pick up in domestic demand also pushed up zinc futures prices here. Meanwhile, zinc was being quoted 0.8% higher at USD 1,925.75 per tonne in early trade on the LME.

Aluminum buyers in Asia seek premium cuts in 2012

Buyers of primary aluminum are seeking lower term premiums for delivery to China and Hong Kong in 2012 as physical supply rises. Sellers and buyers said that global producers and international trading firms had offered premiums of USD 98 per tonne to USD 110 per tonne, a surcharge to London Metal Exchange aluminum prices to buyers in Hong Kong and China for good Western standard grade metal. Deals were mainly at about USD 100 per tonne to USD 110 per tonne for the delivery in 2011 and around USD 120 in 2010.
A purchaser at a semi finished aluminum products producer in Asia said that "We are certainly looking at two digit premiums next year. Spot physical metal supply has risen and spot premiums have fallen. The firm also was worried that demand for aluminum products in the euro region and the United States would stay weak next year, cutting Chinese exports of semi finished aluminum products and needs for primary metal imports.” A manager for a fabricating plant in the southern Chinese province of Guangdong said that the firm had not accepted an offer of a premium just above USD 100 for delivery in the H1 of next year. A trader at an international trading house said that internally, we are bearish on next year's premiums because some LME stocks may come out and physical supply could rise. More than 1 million tonnes of global aluminum stocks were expected to be released from financing deals and the bulk could be removed to buyers' warehouses in the coming few months. Some metal was being offered in Asia.
Traders said that in Asia, supply of spot physical primary aluminum had risen but demand had stayed lukewarm, pushing down spot premiums. Aluminum fabricators in China the world's top consumer and producer of the metal were not keen to import primary metal due to low domestic prices and purchases from Southeast Asian buyers had slowed due to weak export orders. The purchaser said that we got more offers for physical aluminum. Many want to sell but they don't seem to be selling very fast. Spot good Western, standard metal was offered at premiums of about USD 110, on a cost, insurance and freight basis to ports in Guangdong compared to USD 120 to USD 150 in September.

Higher realization raises Hindalco's Q2 net
     

Aditya Birla Group firm Hindalco Industries reported a growth of 15.84% in net profit to ` 502.52 crore for the quarter ended September 30, 2011, on the back of higher realisation from its aluminium and copper businesses. The company had reported a net profit of ` 433.81 crore for the corresponding quarter last fiscal. Net sales of the company rose by a little over 7% to ` 6,272 crore during the quarter under review from ` 5,860 crore in the July-September quarter of FY11, it said in a statement. Revenues from the aluminium business rose by 16% to ` 2,213 crore during the quarter from ` 1,911 crore in the Q2FY11 due to "higher volumes and better prices on the London Metals Exchange (LME)", the statement added. In the case of Hindalco Industries' copper business, revenues improved to ` 4,062 crore during the second quarter of FY12 from ` 3,951 crore in the corresponding quarter of 2010-11 on the back of higher LME prices and by-product credits. However, production of aluminium and copper were lower on an annual basis during the quarter due to constrained supplies of bauxite, sluggish domestic demand and an extended shutdown of one of the smelters at the Dahej plant. In addition, operations at the company's Hirakud plant were affected during the quarter due to "unprecedented rains and the flood situation in September", which disrupted coal supplies to the plant, the statement further said, adding that operations have since been normalised. Providing an outlook for the remaining six months of the fiscal, the company said that it will be "difficult due to global uncertainties, falling LME prices and persisting cost pressures". The company expects to commission its Hirakud smelter expansion project by early 2012, which will increase its capacity to 213 kilo tonnes per annum (KTPA) from 161 KTPA and captive power generation capacity by 100 MW.

       
    Nalco the sole bidder for GMDC's Kutch aluminium project
     

The public sector National Aluminium Company (Nalco) has turned out to be the sole final bidder for Gujarat Mineral Development Corporation's (GMDC) `15,000-crore aluminium project in Kutch, Gujarat. V S Gadhvi, managing director of GMDC, which is owned by the government of Gujarat, told Business Standard, “Two months earlier, we had asked the four shortlisted companies for financial terms. Only Nalco has responded. More or less, the joint venture will be with Nalco for the project,” cautiously adding, “subject to detailed scrutiny”. The company would take a fortnight to evaluate Nalco's financial terms and then put the matter before its board of directors. “By December, the board should be able to finalise and then the project will be sent to the government for its approval,” he said. The project is for a million-tonne alumina and 500,000- tonne aluminium smelter and GMDC will supply bauxite from its mines in Kutch. The total project cost is expected to be around ` 15,000 crore. The nine companies that had shown interest through Expression of Interest (EoI) letters were Hindalco Industries, Gujarat Foils, JSW Aluminium, Nalco, Aluchem (USA), Dubai Aluminium, Jaiprakash Associates, Adani Group and Jindal Steel and Power. Gujarat Foils had partnered with Rusal of Russia, the world's largest aluminium maker, to bid. An official from one of the bidding companies said the bauxite quality at GMDC's mines in Kutch was not very good. "The bauxite is of low quality and that will increase the cost of production of alumina and aluminium,” he said. An official from another major aluminium maker said, "The project was not feasible for us. While we would have made all the investments, GMDC would own a significant minority stake because it was supplying the raw material." Vedanta Aluminium did not even put in its EoI on the grounds the bauxite deposits in the state are very less and an investment of that size would be unfeasible in the long run. GMDC's mines to support the plant have bauxite reserves of 25-30 years. The project has been mired with delays from the beginning. Ashapura Minechem, a bauxite miner and exporter was supposed to set up the plant earlier with GMDC. However, the company could not execute the project and the MoU expired and GMDC invited fresh expression of interests. Even shortlisting of the project was delayed by close to a year. GMDC had announced the project last calendar year and was supposed to shortlist companies by January 2011. However, consistent delays in evaluation, coupled with other administrative issues, forced the company to go slow on the process.

       
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