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Slowdown to Hit Metal Producer's Earning
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Zinc Prices to Scale High
 
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NEWS ROUND UP - INDIAN
Hindalco Mahan project faces risk of cost spike

Hindalco Industries, the Aditya Birla Group flagship, faces a surge in production cost at its upcoming aluminum project in Mahan of Madhya Pradesh. The company is building 359,000 tonne per annum aluminum smelter and a 750 MW plant as a captive source slated to be operational by this year end. The power plant will draw coal from the Mahan coal block located in the Singrauli fields. While the company said that work is on schedule, an impediment to the project's low cost operation could be the coal block which ran into a green hurdle in the form of a no go area last year. Mr Debnarayan Bhattacharya MD of Hindalco said that the issue has been referred to the group of ministers by the ministry of environment and forests and a decision is expected soon. But analysts are jittery just in case the GoM declines approval. An analyst with an international brokerage said that it is not economical to produce aluminum without a captive source. Once the block is cleared, Hindalco can see a huge cost reduction as feedstock will be at virtually e auction rates.
During his interaction with DNA Money a few days back, the analyst had said that considering alumina and power comprise close to 70% of the production cost of aluminum captive source is a must for Hindalco. The company is planning to raise its aluminum smelting capacity to 917 kilo tonne per annum by the next fiscal and 1.28 million tonne per annum by fiscal 2014. The coal block is currently held by Mahan Coal Limited, a JV company equally held by Essar Power and Hindalco Industries. While Essar has an off take agreement for 60% or 5.4 million tonnes per annum of coal from the block to feed its upcoming 1000 MW plant in the state, Hindalco will take the remaining to fuel its 750 MW power plant. Hindalco has an off take agreement of 3.6 million tonnes per annum of coal from the coal block. Analysts Mr Pinakin Parikh and Mr Neha Manpuria of JP Morgan said that “The company has admitted to a difficult situation. Given the changes that may be involved in the approval and coal sourcing pattern, the scope and cost of the project may undergo some modifications. This in our view indicates that while Mahan is on track, cost of production is likely to be sharply higher on coal issues.”

Zinc strong due to firm global trends

With a firming global trend, zinc futures prices rose by 0.41 per cent to ` 98.45 per kg on increased buying support from speculators. A pick-up in demand in the domestic spot market supports the uptrend in zinc futures prices. At the Multi Commodity Exchange, zinc for delivery in August was trading higher by 40 paise, or 0.41 per cent, at ` 98.45 per kg, with a business turnover of 2,841 lots. The rise in zinc futures prices is attributed to a firming trend in base metals on the London Metal Exchange (LME), supported by a pick-up in demand in the spot market.

NALCO prices up

National Aluminium Co Ltd (Nalco) has raised aluminium prices by ` 2,000 per tonne ($43.6) across all products. The price revision was effected in line with the increase in London Metal Exchange (LME) prices. It is expected that next two to three months the prices will range between $2,300-2,500 per tonne. The basic price of standard aluminium ingots after the latest revision has been increased to ` 139,700 per tonne. Nalco had last raised aluminium prices by ` 5,000 at the start of August.

Indian Metallurgical Sector bags FDI worth ` 5,023.34 crore

India's metallurgical sector has bagged Foreign Direct Investment (FDI) worth ` 5,023.34 crore during the 2010-11 financial year, raise of 150% as compared to the last fiscal year. The country's metallurgical sector, which also consists of steel, had lured more than `1,999 crore in FDI during the financial year 2009-10. According to the Department of Industrial Policy and Promotion (DIPP) the metallurgical sector has successfully bagged `4,152.56 crore worth FDI during 2008-09. Moreover, Japan-based company JFE Holdings had acquired 14.99% stake in JSW Steel in the last fiscal year. The international steel companies such as Posco and Arcelor-Mittal have recommended more than `2 lakh crore worth of investment in India. Posco is considering to set up 18-million tonnes per annum (mtpa) of steel capacity at the investment worth ` 84,000 crore, while Arcelor-Mittal is planning to set up plants with a cumulative capacity of 30- million tonnes per annum at an investment worth ` 1.2-lakh crore.

Nalco to complete dut diligence on Indonesia coal mines soon

State-run National Aluminium Company (Nalco), which plans to set up a 1,250-MW power project and an aluminium smelter in Indonesia, is planning to complete due diligence on a proposal for sourcing coal for the projects by the end of this month. The company is in the process of evaluating the reserves of two coal mines and due diligence will be over by September. Nalco has sought 10 million tonnes per annum (MTPA) of coal supply over a 20-year period and is looking at two coal mines in the East Kalimantan district of Indonesia. It is looking at (supplies from) two mines, having a minimum of 500 million tonnes of reserves, for sourcing 10 MTPA of coal. The mines are in East Kalimantan district. The Navratna firm has plans to set up a 5 million tonnes per annum aluminium smelter and a 1,250-MW power plant in two phases (700 MW in Phase-I and 550 MW in phase-II) in Indonesia at an estimated investment of USD 3.8 billion (about `16,500 crore). Out of the 10 million tonnes per annum of coal solicited by the company, the aluminium producer will utilise about 8 MTPA at its power plant and smelter in Indonesia, while the remaining 2 MTPA will be shipped to India to fuel its operations here. The Indonesia project will be managed through a special purpose vehicle (SPV), in which the aluminium major will have a controlling stake. The project would be developed in about 4 years time, including one year for preparing the feasibility study and DPR, following finalisation of the coal supply agreement, Bagra said, adding that the Indonesian SPV formed by Nalco would raise the necessary finances. The company will take about one year to prepare the feasibility study and DPR for the power plant and smelter and another 3 years to develop it. For the project, the special purpose vehicle (SPV) will raise loans, but nothing has been decided as of now. Ideally, Nalco would like have a debt-equity ratio of 70:30 for which a final decision on financing the project will depend on the feasibility study and DPR.

Hindalco may delay fund raising for refinery

The Aditya Birla Group base metals producer Hindalco Industries has decided to delay the financial closure of the ` 7,800 crore Aditya Aluminium refinery project due to uncertain market conditions. In a recent media briefing D Bhattacharya, Managing Director, said that the markets were not favourable to raise the money at this point in time. He, however, said work on the project was on and there was no constraint on funds to hold up the project. The debt to equity ratio for the project is 75:25 and the company is using equity for the project. Hindalco had raised $600 million via a QIP issue in 2009 for its expansion plans. Sunirmal Talukdar, CFO, said the project size for Mahan and Aditya were same and both required the same amount of funding. He said Hindalco will wait for the right opportunity to tap the market. The company had considered several products to raise money and will take a final decision once it decides to go ahead with the financing. He said the company prefers rupee financing with an option to refinance part of the rupee loan with a cheaper ECB, if the opportunity arises. “Normally, we always keep the option of getting a cheaper ECB credit open. This is what we did with the Mahan and Utkal financial closures. We have a comfortable cash balance today, so we are not in a desperate need of money. We want to launch it when the market improves.” The company said the project is expected to be commissioned in 2013. The project includes a 359-kilo tonne per annum aluminium smelter, a 900 Mw captive power plant and an alumina refinery. The company has got the clearances for the 260-ktpa smelter and 600 Mw of power generation.

Select base metals down on lower global trend

Amid a weak trend overseas and subdued demand from consuming industries, select base metals lost up to INR 2 per kilogram at the local nonferrous metal market. Traders said that subdued industrial demand and reports of weak global trend mainly led to a fall in select base metal prices. Meanwhile, copper for three month delivery fell by 0.8% to USD 9,005 per tonne, the lowest level since August 26 on the London Metal Exchange. In the national capital, copper wire scrap, copper wire bar and copper mixed scrap remained weak and shed another INR 2 each to INR 517, INR 540 and INR 502 per kilogram respectively. Nickel (4x4) followed suit and traded lower by the same margin at INR 1073 per kilogram to INR 1075 per kilogram. Lead ingot and lead imported were also enquired lower by rupee one each to INR 142 per kilogram and INR 147 per kilogram.

Vedanta to focus on Jharsuguda smelter plant expansion

With the 5 million tonne Greenfield Lanjigarh aluminum refinery plant expansion on hold, the Anil Agarwal led Vedanta Aluminum has decided to focus on completing its aluminum smelter plant at Jharsuguda in Orissa to achieve its targeted capacity of 1.75 million tonnes. Mr Mukesh Kumar president & CEO of VAL said that "The work is on, on a war footing, at the proposed project site at our Jharsuguda plant and we will achieve 1.75 million tonnes capacity by the end of the next financial year.”
The company has so far invested around INR 35,000 crore in its Jharsuguda project and around INR 10,000 crore at the Lanjigarh plant and plans to invest the balance of INR 15,000 crore by 2013 to complete its planned expansion. VAL plans to up its smelting capacity at Jharsuguda plant to 1.75 million tonne from the present 0.5 million tonne by 2013. Mr Kumar said that the Phase I of our 0.5 million tonne per annum smelter and 1 million tonne per annum alumina refinery has already been completed and work on the Phase II is on, except the alumina refinery which is under hold as per the Union Environmental Ministry directives. He said that the company has set up a Greenfield aluminum refinery plant with a capacity of 1 million tonne at Lanjigarh and plans to ramp up it to 5 million tonne. We are awaiting the environment ministry's clearance to ramp up capacity at Lanjigarh plant in Kalahandi district. The expansion of the refinery plant ran into rough weather after the Union Environmental Ministry refused to give clearance on October 21st 2010.

Supreme Court reserves order on Sterlite plea against closure

The Supreme Court reserved verdict on Sterlite Industries' interim application seeking a stay on the operation of the Madras High Court judgment ordering closure of its copper plant at Tuticorin and discharge of its workers on payment of compensation. A Bench of Justices RV Raveendran and AK Patnaik extended the interim stay on the High court judgment, granted in October last at the stage of admission of the Sterlite appeal. Senior counsel CA Sundaram, appearing for the company, said that there had not been a single violation of pollution or environmental laws after 1996. Permission for the copper plant was given according to the previous norms when it was not in the eco sensitive zone as per Environment Impact Assessment guidelines. Senior counsel V Prakash for the National Trust for Clean Environment read out a report of the National Environmental Engineering Research Institute pointing out various deficiencies to be addressed by Sterlite, particularly its failure to comply with the norms on solid waste disposal. Mr Marumalarchi Dravida Munnetra Kazhagam general secretary Vaiko one of the petitioners before the High Court, said that the pollution caused by the company was posing serious health problems to people at Tuticorin. Groundwater and air had been greatly polluted because of gaseous emissions and opposed the running of the company without its complying with the NEERI recommendations. Additional Advocate General Guru Krishna Kumar appearing for Tamil Nadu wanted the company to comply with the NEERI recommendations in a time bound manner.

Indian zinc marginally down in futures trade

Taking weak cues from global markets, zinc prices fell by 0.45% to INR 100.40 per kilogram in futures trade. Weak trend at the spot markets owing to subdued demand also put pressure on zinc prices. At the Multi Commodity Exchange, October zinc declined by 45 paise or 0.45% to INR 100.40 per kilogram with a business turnover of 63 lots. The September contract shed 35 paise or 0.35% to INR 99.45 per kilogram in 2,658 lots. Market analysts attributed the rise in zinc futures prices to a weakening trend on the London Metal Exchange, besides subdued demand in the spot market.

NEWS ROUND UP - GLOBAL
Rio, Anglo American to exit from S African copper production

Mining majors Rio Tinto and Anglo American have decided to dilute their cumulative over 74.5 per cent stake in Palabora Mining Company (PMC), as the current operation of the South Africa-based copper producer do not match their investment criteria. Rio Tinto has initiated a commercial process to sell its shareholding and Anglo American will participate in that process, PMC said in a release. Rio Tinto holds 57.7 per cent stake and Anglo American 16.8 per cent in PMC, which owns a copper mine, smelter and refinery complex in the Limpopo Province of South Africa. The rest of the company's shareholding is with the public. The copper operation is not of a scale to suit Rio Tinto or Anglo American's investment criteria. Incorporated in South Africa in August 1956, PMC is South Africa's only producer of refined copper and produces about 80 thousand tonnes a year and meets most of the country's needs. It has a current mine life till early 2016. In a statement to Australian Stock Exchange, Rio said, "Studies are underway for a potential extension of the mine's life to 2030, but it is no longer of sufficient scale to fit with Rio Tinto's strategy". Anglo American also felt that the operation of PMC was no longer enough to suit its investment strategy. Palabora owns a magnetite stockpile and the future value creation is likely to involve the on-site processing and beneficiation of magnetite, an opportunity that Anglo American believes will be best developed under new ownership. PMC also owns a vermiculite mine and a magnetite stockpile.

African zinc mine to start next year

A new zinc mine in west Africa is due to start up in mid-2012, just as some of the world's largest deposits are winding down, creating the first window in years for new suppliers in a chronically over-supplied market. In December, Glencore invested $80 million into the project before acquiring a 13 percent stake in Blackthorn at 62.45 Australian cents a share at a time when the stock was fetching 53 Australian cents, making it Blackthorn's largest shareholder. Lowe said Blackthorn had not discussed selling its stake in the Perkoa mine to Glencore amid market speculation the commodities trading giant was buying up assets. The Glencore International -controlled Perkoa zinc mine in Burkina Faso will start shipments of concentrate by June 2012, rapidly building to an annual rate of 90,000 tonnes contained metal, joint venture partner Blackthorn Resources said. Blackthorn Managing Director Scott Lowe said start up of the mine, following an A$80 million ($84.6 million) cash injection by Glencore, would track the closure of bigger zinc mines in Australia and North America, which is threatening to create a supply gap for the metal.For now, analysts believe there is an oversupply of zinc of between a half million and 750,000 tonnes, if global demand remains at around 13.5 million tonnes. Glencore took the reins in December and they have been managing the project ever since. The company is expecting that the zinc mine will be commissioned with the first concentrate coming though in mid 2012. Zinc is used chiefly in galvanising steel for use in bridge and road construction as well as auto making. Landlocked Burkina Faso has emerged as Africa's fourth -largest gold producer but has yet to establish a base metals mining industry. Lowe said the companies were planning to truck the zinc through neighbouring Ghana for shipping from its Tema port, a route more economical than moving concentrate via rail some 1,200 kilometers (740 miles) to the coastal port of Abidjan of politically unstable Ivory Coast. The mine is being developed as a partnership: 50.1 percent owned by Glencore, 39.9 percent by Blackthorn and 10 percent by the government of Burkina Faso. Glencore accounted for about 60 percent of the world's zinc traded internationally last year. Glencore has already contracted to buy the mine's entire annual production at market prices once some early supply obligations to third parties are completed, according to Lowe. Lowe also said findings of exploration work conducted by Glencore to determine the economic feasibility of also mining silver and lead from the mine would be finalised soon.

Argentina and China in talks to build copper refinery
     

Argentina is in talks with Chinese investors to build USD 750 million copper refinery in the South American country. Mr Jorge Mayoral mining secretary said that "We have discussed this issue with Chinese companies that produce cathode copper, that are copper consumers and are eager to have a this kind of commercial relationship with Argentina because they see us as a big player in the copper market in the future." Mr Mayoral declined to identify the companies or provide a timeline. The project would involve building a plant to process copper concentrates into 210,000 tonnes of cathode copper and 700,000 tonnes of sulfuric acid a year. Currently, Argentina only has one significant copper mine, Bajo de la Alumbrera with annual production capacity of 150,000 tonnes of copper and 400,000 ounces of gold in concentrate. Xstrata PLCowns 50% of the mine, while Goldcorp has a 37.5% stake and Canada's Yamana Gold Inc have 12.5%. Those companies also own the nearby Agua Rica copper gold molybdenum mine project. Argentina currently ships copper concentrates abroad but the government is pushing for more domestic processing as copper production rises. Based on recent exploration and discoveries, production will grow 10 fold in the coming years.
The world's biggest copper producer is Chile's state owned Codelco, which produced around 1.69 million metric tons last year from the other side of the Andes Mountains which separate Argentina and Chile. According to consulting firm Deloitte, Chinese investment is flooding into Latin America, reaching USD 15.6 billion during the 12 month period through the end of May, nearly three times greater than the year earlier period. Of that amount, Brazil received about 60% and Argentina close to 40%. During the last three years, more than 70% of China's investment in the region went to energy and minerals but farming has become increasingly important and the Chinese have even moved into banking.

       
    Nickel demand to raise 4-5%
     

Global nickel demand is seen rising 4-5 percent a year, the chief executive at French mining group Eramet said. The future of nickel is a very bright. Owing to increased consumers' emphasis on stainless steel consumption, the demand of nickel is estimated to rise continuously, Eramet's CEO Patrick Buffet said after a meeting with Indonesia's president in Jakarta. The company's big projects include the Weda Bay nickel deposit in Indonesia, which Eramet is exploring in partnership with Japan's Mitsubishi Corp. Benchmark London nickel prices is hovering around $21,099 a tonne. The Indonesian government is considering imposing a tax on exports of mineral ores such as nickel and copper to encourage domestic processing of the metals, Industry Minister Mohamad Hidayat said. The tax will encourage mining companies to prepare for a ban of mineral ore exports in 2014 as required by the mining law. The government is discussing the plan with local administrations.

       
Investment to go up in Macro Asia Corp JV nickel mine
     

The Philippines' Macro Asia Corp said that its joint investments with China's Jinchuan Group Ltd in a nickel mine in southwestern Palawan province may reach $1 billion. Diversified group Macro Asia said in a disclosure to the stock exchange it had signed a memorandum of agreement with Jinchuan in Beijing during President Benigno Aquino's state visit recently. Jinchuan, China's top nickel producer and third-biggest copper producer said it was investing in two laterite mines in the Philippines and would partner with Macro Asia and the Zamora group for the projects. The estimated value of investments by both MAC (Macro Asia) and Jinchuan is about $1 Billion. Said investment is the total amount involved over the life of the project when the plant and other processing facilities are in place. Laterite is the ore for the production of nickel-pig-iron (NPI) and ferro-nickel. Both NPI and ferro-nickel are used for the production of stainless steel. China is the world's top producer of NPI, a low grade ferro-nickel with high iron content, and relies on imported laterite ores for NPI production. The Philippines was China's second-largest supplier of nickel ore and concentrate imports after Indonesia in the first seven months of 2011.

       
    JFE to boost global tin plate capacity
     

JFE Steel Corp will beef up its annual production capacity for tin plate, used to make beverage and food cans, by 47 percent to about 4.4 million tons by 2020, the Nikkei business daily reported. The market for such anti-corrosive steel is expanding as living standards improve in emerging countries, the daily said. The JFE Holdings Inc unit's current capacity stands at about 3 million tons, Nikkei said. It will consider upgrading existing plants as well as building facilities with a yearly capacity of 200,000 tons to 300,000 tons each in places such as India, Vietnam and the Middle East, the daily reported. Total investment in these projects will be about 20 billion yen ($261.2 million) and they will be pursued as joint ventures with local firms, Nikkei said. Its rival Nippon Steel Corp is spending 24 billion yen to build a tin plate factory in China jointly with Wuhan Iron and Steel (Group) Corp which is scheduled to open in 2013, the report said.

       
    Rusal rejects Norilsk buy back offer

The board of the world's top aluminium producer UC Rusal unanimously rejected an $8.75 billion offer by mining giant Norilsk Nickel to buy back its 15 percent stake in Norilsk. The believes the proposed terms of the deal do not reflect the fundamental value of a major stake in Norilsk Nickel, which remains a strategic investment for Rusal. The $306 per share offer for a 15 percent stake, which represents a 20 percent premium to the weighted average market price for the past six months. Norilsk said that it plans now to make a buyback offer to other shareholders. Norilsk's board will meet in the near future to discuss the parameters of the buyback. The date for the meeting has not been set yet. Norilsk Nickel made the buyback offer last month in its third attempt to repurchase the shares and resolve a long-running dispute between rival oligarchs Vladimir Potanin, whose Interros investment company holds about 30 percent of Norilsk, and Oleg Deripaska, who controls Rusal. Interros, Potanin's investment vehicle, said that it would propose to minority shareholders buyback conditions similar to those in the offer to Rusal. After the rejection of the offer by Rusal, the same offer should be made to all holders of shares and American Depositary Receipts of Norilsk Nickel. Deripaska Rusal paid an estimated $14 billion in cash and stock for its 25 percent Norilsk Nickel stake in 2008. The tycoon had hoped to merge the global leaders in aluminium and nickel production into a national champion, but was outmaneuvered by Potanin in a battle for control of the Norilsk board. Analysts said earlier they expected Rusal to reject the offer.

Bosnia's aluminium smelter in black

Aluminij Mostar, Bosnia's sole aluminium smelterer, returned to profit in the first half of 2011 after posting a loss of nearly 13.4 million Bosnian marka ($9.7 million) in 2010. Aluminij is also expected to end the year with a profit and that he has secured the support of shareholders to slash a 900-strong workforce by around 10 percent. It's not a minor achievement to take over a company that ended 2010 with a nearly 13.4 million marka loss and turn it into a profit that is significantly above zero. However, the company declined to disclose actual figures. The company's operation is expected to improve in the fourth quarter because he hoped that lower aluminium prices in the world market would rise again at the end of September. Around 10 percent of jobs would be cut as a means to increasing productivity and this would be achieved through the early retirement of some workers. A rise in production costs had caused Aluminij to change the way it will do business in future so that it can better cope with higher input prices. The company is also considering the construction of a gas-fired power plant with an annual capacity of 425 megawatts to meet the company's own needs and as much as 200 MW for sale. There is also an option of constructing a solar power plant and talks on such a technology are underway with Italian partners, Bradvica said, but declined to name them.

South Korea's reserves raise concern for demand-supply

South Korea's limited mineral reserves are unable to meet the country's demand from the industrial sector. South Korea has small reserves of antimony, gold, copper, iron ore, lead, molybdenum, silver, tin, tungsten and zinc. The country's domestic coal reserves have been exhausted, although it holds reasonable quantities of non-metallic minerals such as kaolin, limestone, feldspar, quartzite and mica. South Korea is one of the world's leading steel producers and a leading producer of cadmium and slab zinc. As such, South Korea is an overall net importer of mineral commodities and one of the region's main importers of coal, natural gas, nickel oxide sinter and ores and concentrates of copper, iron, lead and zinc. The current focus is on overseas exploration as the country seeks to secure supplies of raw materials to power its industrial base.
South Korea's mining and refining sectors could be boosted by events in Japan. In the short term, South Korean companies such as Korea Zinc are likely to benefit from greater demand for lead, as consumers resort to battery power for energy supplies. Looking further ahead, reconstruction efforts in Japan are likely to increase demand for South Korean steel and copper.

Aluminium in negative on LME

Aluminium traded with the negative node after Manufacturing data released which was disappointing in Europe. This further indicates difficulties to improve debt woes in the area.Even though China and US manufacturing data met market expectations, stagnating economic recoveries in the two countries still discourage investors to seek security with US dollar.As a result, the US dollar rose to 74.714, pressing down LME aluminium prices.

Low domestic demand of zinc in China

China's buying of refined zinc in the international market may be restricted by low domestic demand and high stocks for the current quarter. According to sources, near 1.4 million tonnes of refined zinc may be stored in public and private warehouses in China currently, smaller than up to 1.5 million tonnes in June due to 7.2% fall in production in July.
The stocks, including Shanghai Futures Exchange's near record of 400,450 tonnes are equivalent to more than 3 months of China's monthly zinc production. China is the world's largest producer and consumer of zinc. The arbitrage window between the three month London Metal Exchange zinc and Shanghai prices opened and reached a multi month high of near CNY 900 per tonne.
The arbitrage is now profitable based on the LME and Shanghai prices. But similar margins can be achieved between the front-month and forward contracts in Shanghai, plus domestic demand is not good which produces zinc in China and imports the metal. Unlike copper, Chinese importers had not increased booking of spot refined as high stocks and weak demand made importers cautious about booking more spot shipments. Zinc is very sluggish compared with copper. The volume is very small, hence importers are not keen to book spot zinc because of the seasonal weak demand in the summer.
China imported 25,317 tonnes of refined zinc in June up from 25,101 tonnes in May. It produced 425,000 tonnes of refined zinc in July down from 458,000 tonnes in June.
Zinc demand from diecasting plants had fallen from June and now many plants were operating below their capacities. Many small plants in Zhejiang province that made parts for locks had closed due to reduced orders and tight credits which reduced plants' cash to buy zinc.

Metorex vote for South African subsidiary

Jinchuan to acquire the entire issued and to be issued ordinary share capital of Metorex by way of a scheme of arrangement. Accordingly, shareholders in Metorex would receive a cash consideration of ZAR 8.90 per share by way of a scheme of arrangement. The implementation of the scheme of arrangement is subject to the fulfilment or waiver of certain conditions precedent as set forth in the circular to Metorex shareholders.

Crown expands business in China

Crown, world's leading packaging product supplier, plans to continue its business expansion in China to support a strong market growth. The company will construct two new aluminium beverage can production facilities and will add a second production line to a facility that is under construction.
The new plants will be built in Changchun, Northeastern China and Zhengzhou, Central China. Each facility is expected to initially produce 720 million of two piece aluminium beverage cans per year. The Changchun facility is expected to commence operation in the Q3 of 2013 and will manufacture 50 cl and 33 cl cans. The Zhengzhou facility will manufacture 33 cl aluminum beverage cans and will begin operation by the initial quarter of 2013. The company will also add the second can production line to its plant in Putian, Fujian Province and it is expected to produce 25 cl and 33 cl beverage cans. The addition will expand Putian facility's annual production capacity to approximately 1.4 billion.
Crown will own ten beverage can facilities in China, once the construction of the two new plants are completed. It has operations in Shanghai, Hangzhou, Huizhou, Foshan and Beijing and three plants are under construction: Ziyang, Heshan and Putian.

Rio Tinto and Anglo American part ways over Palabora

Mining giants Rio Tinto and Anglo American intend to sell their entire stakes in South African copper miner Palabora.Rio Tinto owns 57.7% of Palabora, while Anglo American owns 16.8%. The company is worth about $975m (£605m).Both companies said the South African mine was not big enough to justify their continued ownership.
They said the mine would be best served by developing its magnetite business under a new owner. The companies will continue engaging with employees, the South African government and other stakeholders as the sale process develops and to ensure a smooth transition to a new owner.
While studies are under way for a potential extension to the copper mine's life from 2016 to 2030, the operation is no longer of a sufficient scale to suit Anglo American's investment strategy.

Chalco losses in H1 net profit

Aluminum Corporation of China Limited missed forecasts with 22% fall in H1 net profit hit by higher interest costs. Chalco posted a net profit of CNY 413 million compared with a forecast for 678 million. Sales rose 10.4 percent to CNY 66 billion. Finance costs including interest jumped by a sixth to CNY 1.55 billion. It had set aside CNY 273 million for expenditure incurred by its termination of a project to develop bauxite resources in Aurukun, Australia. There has been solid domestic demand this year for aluminium, which is closely tied to economic activity, being widely used in industries from packaging to construction and aviation. However a better second half is expected for Chalco on higher aluminum prices.But additional low cost capacity would start operating in the H2 adding pressure to prices from the Q4. With a high cost aluminium position Chalco has been trying to diversify by commodity and geography. Last year,Chalco agreed with Rio Tinto Limited to invest USD 1.35 billion for 47% stake in JV to develop the Simandou iron ore project in Guinea. The company has indicated that it could issue additional equity via an A-share placement in Shanghai and a proposed issuance of H-shares in Hong Kong to help fund investment and capital spending.

Burkina Faso first zinc mine to start up in 2012

A new zinc mine in west Africa is due to start up in mid 2012 just as some of the world's largest deposits are winding down creating the first window in years for new suppliers in a chronically over supplied market. JV partner Blackthorn Resources said that the Glencore International controlled Perkoa zinc mine in Burkina Faso will start shipments of concentrate by June 2012, rapidly building to an annual rate of 90,000 tonnes contained metal. Mr Scott Lowe MD of Blackthorn said that start up of the mine following an AUD 80 million cash injection by Glencore would track the closure of bigger zinc mines in Australia and North America which is threatening to create a supply gap for the metal. For now, analysts believe there is an oversupply of zinc of between a half million and 750,000 tonnes if global demand remains at around 13.5 million tonnes.
Mr Lowe said that Glencore took the reins in December and they have been managing the project ever since. We're expecting that the zinc mine will be commissioned with the first concentrate coming though in mid 2012. Glencore has already contracted to buy the mine's entire annual production at market prices once some early supply obligations to third parties are completed. Mr Lowe said findings of exploration work conducted by Glencore to determine the economic feasibility of also mining silver and lead from the mine would be finalized as early as next week. It's definitely a zinc mine and may become a zinc, lead and silver mine.
In December, Glencore invested USD 80 million into the project before acquiring a 13 percent stake in Blackthorn at 62.45 Australian cents a share at a time when the stock was fetching 53 Australian cents, making it Blackthorn's largest shareholder. Mr Lowe said that Blackthorn had not discussed selling its stake in the Perkoa mine to Glencore amid market speculation the commodities trading giant was buying up assets. Blackthorn would be a reluctant seller if Glencore made an offer. It would have a tough time convincing Blackthorn to sell given the upside potential he sees for zinc markets.

Zambia slumped 15% at the close of first 6 months of 2011

Profit for Zambia metal Fabricators, the leading manufacturer and supplier of copper related cables and accessories to the mines and export market, slumped more than 15% at the close of the first 6 months of this year as the global debt crisis in the Euro Zone takes its toll. According to its unaudited reported for the period ended June 30th 2011, the company's net income after taxation slowed down to ZMK 11 billion compared to ZMK 17.3 billion a year earlier. Mr Maona Ngwira company secretary said that exports of copper related products rose to ZMK 483.2 billion compared to the previous period which recorded ZMK 478 billion while domestic exports rise to ZMK 82 billion from ZMK 50 billion. Operating income slumped to ZMK 18 billion at the close of the first 6 months this year compared to ZMK 28.2 billion and income before taxation was lower at ZMK 13.5 billion from a year earlier record ZMK 21.2 billion. The company paid taxation of ZMK 2.5 billion from a year earlier ZMK 4 billion.
It stated that turnover for the company during the first six months increased due to higher copper prices and an improvement in domestic market. The company is a member of the Lusaka stock exchange. The increase in sales in the domestic market was a result of the favorable economic conditions prevailing in the country which led to significant investment in construction and mining sectors. Operating income declined this year because of the company's exporting a higher percentage of copper rod compared to insulated products which have bigger margins. On the outlook the metal company, known as Zamefa said Zambia's investment climate remained conducive and continues attracting a number of investments in various sectors. However, the debt crisis in the Euro Zone and the United States were key factors in determining the economic prospects for the country's growth which could affect this part of the world. The company seeks to forge ahead and improve its product quality through equipment modernization and remain competitive in the markets where it operates and create value for all its stakeholders.

Copper falls due to economic uncertainty

copper fell after poor US jobs data for August. There are concerns about US economy and a constrained supply pipeline. Benchmark copper on the London Metal Exchange CMCU3 closed at USD 9,076 per tonne down 0.8% from a close at USD 9,148 per tonne. It earlier reached its lowest in four sessions at USD 9,018 per tonne and remains more than 10% below record highs from February. If demand from China increases, the price of copper may increase. US employment growth is lowand discouraged consumer confidence pressurising Federal Reserve to provide more monetary stimulus to aid the economy. According to traders, an increasingly uncertain US economic outlook, added to sovereign debt issues in Europe, copper consumers were sidelined with little incentive to buy. The poor US jobs reports raises the chance the US Federal Reserve may embrace further easing measures but this is expected to give only a brief lift to metals prices.

Rusal to up alumina Production

Russia's United Company RUSAL plans to raise annual production capacity at its Irish refinery of intermediate product alumina by 110,000 tonnes to 2 million tonnes by 2013. RUSAL has said it would increase output of alumina, a key material in the production of aluminum by 8% this year after it rose 8% to 7.8 million tonnes in 2010.

Strikes at Mulyashi copper

More than 1,000 contractors erecting Mulyashi copper open cast mine in Luanshya (a unit of China's nonferrous metals corporation in Zambia) went on strike to demand for better wages and benefits such as lunch allowances and decent transport. The miners decided to stop work because despite their input where they work more than 13 hours per shift, they were only receiving a paltry ZMK 400,000 per month without any risk allowances. They have asked mine owners not to treat them like casual workers and want to be paid what is due to them before resuming work.
There have been incidences involving Chinese mine owners giving a raw deal to Zambian employees, breaking the labour laws that demand equal pay for equal work. Last year, Zambian miners were shot at by their employers at Collum coal mine in Sinazongwe in southern Zambia after demanding for their wages and improved conditions of service. At Chambishi mine, another Chinese-owned mine, more than 20 Zambian workers were dismissed for refusing to accept 12% wage increase. Despite the workers having contested the matter in a court of law, the employees were dismissed and many were paid an average USD 150 despite the service rendered to the mine.

Chinese aluminum extrusion export saved by Australia

After losing two big markets of Canada and United States, China's aluminum industry finally gets some good news: Australia cuts down AD and CVD duties set against China's aluminum extrusions exported to the nation. Otherwise China could lose 2/3 of the demand from developed counties covering North America, Europe and Australia, the destinations of China's aluminum extrusion before the punitive duties were set against China. Australia's annual demand for aluminum extrusions is about 0.15 million tonnes of which 2/3 is supplied by local manufacturers including Capral and G James China's aluminum extrusion exported to Australia was about 39,000 tonnes in 2010.

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