The ENAL Newsletter News Page
Until a few years ago, most smelters operated or were being built within a stable, predictable energy context: Integrated power, or benefiting of a favorable “power island” (region where excess power is and will remain available), or stable contractual environment. General energy shortage plus escalation of energy costs is changing this. Each investment decision, even a modest revamping, is conditioned by some kind of renegotiation or development of energy supply. This smelter invests $50 million because its contract was renegotiated. This greenfield project is on hold because the local government delays decisions regarding energy supply, and the investor is favoring another country where energy plans are moving faster; the owner of these two old smelters – scroll down and seek ‘new base-load’ manages to secure energy until 2036, which will now facilitate various revampings; this greenfield keeps being delayed – scroll down and seek ‘halted construction’ because new questions on energy supplies delays financing; a major extension of this old smelter has eternally been delayed because of producer/government disputes regarding an integrated power plant, and we read now that the dispute is finally solved. Meanwhile, in this faraway land, a government decision – scroll down and seek ‘nations to develop’ - to engage the planet’s largest hydropower project ever will condition the whole future of several greenfields in a region which, only ten years ago, was still considered as a “power island” with massive, unused energy capacity. Introducing an improvement on the CIF Matrix: Subscribers, when reading CIF, note that the most probable and major investment projects are now highlighted in light blue to facilitate focusing.
ENAL has prepared a Special Report on foreseeable evolutions of technology in the context of increases of energy costs, and of the complete uncertainties in matter of alleged Global Warming and more especially Anthropogenic Enhanced Global Warming (AEGW) which has become the object of major controversies and even scandals. Our report explain why, CO2 or no CO2, things will never be the same. A completely innovative technology for primary aluminum production may be a major factor in the coming changes. Another was already announced - scroll down and search for 'UC Rusal IPO' - but may take much longer to develop. A conventional but State of the Art process is now proposed to the world market, competing seriously with Alcan-Pechiney’s technology, which will however remain dominant, here is why. This major producer is making progress to safeguard its investments - scroll way down and search for 'caretaker government' - and promote new ones in this highly controversial African country. This smelter - scroll way down and search ‘oversee reconstruction’ - will benefit from new, momentous energy contracts. This smelter was due to shutdown, but negotiations are in progress which will at least cause delays. In this country, humongous hydropower projects stay the course and attract more investors despite strong political resistance. This country - scroll down and seek ‘upgrade energy’ - has only one old smelter, but it is silently progressing in its revamping and may find along term solution to its energy problems. Meanwhile, its only smelter is not waiting for further investments. This greenfield project added to an old existing site is progressing, gaining scope in size and downstream integration. This country also has only one smelter, but more than one project addressing energy and all steps of process will add new capacity in the not too far future, for the country and for another one which so far has no capacity at all. China is now joining the club of major investors in both countries.
This report explains very well why, despite the metal glut in LME inventories, the industry must prepare for an important increase in demand. It also gives a list of investment projects on the agenda today, and you will be reassured to see that it matches quite well our forecast in our Capacity & Investment Forecast Model (CIF Matrix), accessible to our subscribers. This report completes it, explaining more in detail how the metal glut will be absorbed within 18 months. This report discusses an energy-generation mega-project which will serve the needs of two and may be three greenfield smelters. This smelter has been waiting for its major extension for decades and the project was dormant because of political disputes. It seems to be on the move again. Here is another megaproject illustrating again that future aluminum capacity investments will be built on the model integrating in one entity energy generation and smelting. We predicted the come back of this model years ago. This old and solid, healthy smelter is silently improving its energy supply again thanks to investments of the metal producer, which will allow a new potline effective within 2 years. This conglomerate in energy and mining is negotiating the sale of its excellent smelter. (Scroll way down) To whom? In this country who should be a new aluminum producer in 2015, public hearings have begun. Rusal has succeeded its IPO but guess who is the leading investor? Here is another country who might within a few years have shut down all its smelters , and here is a smelter who was waiting for its extension, had given up, and is seriously reconsidered. Our guess is its extension will produce metal in 2013.
Shall we continue, 50 years from now, producing aluminum using the Hall-Heroult Process as it is? Some doubt it now, because of exceptional political pressures expressing environmental dangers. These dangers are more and more recognized as massive, controversial as to their natures and scenarios, but potentially cataclysmic. And since inertia is colossal in our industry, it is reasonable to ask oneself when, if ever, will there be an alternative to the Hall-Heroult Process that would completely eliminate the issues. These issues are: CO2 emissions; high energy and capital intensity; high logistics intensity; economies of scale imposing mega-projects. This is why we announce ENAL’s special research program: A Technology Forecast Study assessing when an Innovative Aluminum Smelting Process (IASP) that will eliminate CO2 emissions in electrolytic reduction and significantly reduce energy and capital costs will become a credible, bankable option as smelting technology. If you aren’t yet a subscriber, now is the time. One of the news that brings the world’s attention on IASP was Rusal’s statement that it has obtained enough encouraging results with their experimental Inert Anode process to highlight it as an intangible, promising asset in their IPO prospectus. Meanwhile this greenfield – scroll down - just produced its first metal, and this older European smelter seems to plan a restructuring to avoid shutdown in the foreseeable future, with the help of improving LME prices. It may even mean some investments within one or two years. In this equatorial country, China is preparing to pump billions in a power project conditioning more than one greenfield already in the pipeline. In this other African country, the sole smelter – click here and scroll one notch up - continues to create a basket case of litigations between government and investor.
It seems that at same time they will succeed an IPO backed by China and major private investors, a massive debt-to-equity conversion, quasi-equity financing by the State, and government financing for the technology that will eliminate CO2 emissions in aluminum smelting. Not bad for the New Year. This suggests most important long term questions which we discuss here – scroll searching for ‘Rusal IPO’. Meanwhile we read good news here about LME inventories and prices in this article. This new smelter now running at full capacity will certainly keep investing. Here is another country planning to become an aluminum producer for the first time. In this country, aluminum demand will rise 15% this year. In this greenfield project, now rated as very serious, the main investor and technology supplier changes. This old smelter is saved by an energy contract – scroll down looking for ‘lifeline’ - which means some refitting down the road. This European country undertakes major energy investments which will save its smelter. Smelter will invest now. This controversial greenfield, the first for this country, seem to move ahead despite political opposition. But in this country, energy priorities may finally trigger a shutdown. Here is a probable greenfield to be build soon. This smelter survives and plans boosting production and refittings. This smelter gets an interesting power deal, meaning again some extension. This Chinese power firm will invest $8 billion, to support major aluminum projects. This alumina expansion indicates that a dedicated smelter keeps on investing. This major international utility will invest in nuclear energy in China, which will add support to the aluminum industry. And here is another country where massive investments, in railroad systems for bulk freight, comes to the support of a greenfield project.
One major aluminium producer finally managed to restructure its debts which will have momentous consequences, since he has his fingers in many projects. Its country also makes the right decisions to finance revamping of its huge power generation system. However speculation on commodities affects aluminium by supporting a piling up of LME inventory. Growing long term demand is certain to gradually clean it up, but not right now. This government will take over the country's sole smelter and states the date - scroll down after clicking - It will mean capacity investments by then. This other government envisions serious and massive energy generation investments of multiple sources which will facilitate investments already planned - scroll way down - in its small but solid primary aluminum industry. But here are the new facts indicating that the future of European smelters is doomed more than ever, witness the European Commission's recent attitude towards a major foreign producer. In Asia, more investments illustrate to what extent the local industry favors integrating energy generation with metal smelting. This highly efficient smelter, world leader in lowest energy per tonne consumption, goes further by a spin-off of its most promising pilot cell in original financial conditions. This smelter increases capacity by one third. In China, now the world's biggest aluminium producer, industry faces a serious energy price increase.This greenfield can now resume construction: The country hosting it got an incitation from Europe triggering megafinancing of its energy sector. In Latin America, this producer definitely emerges as a future leader, and pursues investments right now to that effect.
Here is a smelter which took ages to build because this country was determined to utilize as much as possible internal resources and a technology politically more acceptable to their spiritual leaders. It is now completed after years of slow construction during each potline was built and started by small steps. It is a side by side, prebaked anode smelter. Meanwhile, this leading aluminum producer tells how it will manage a loss of six million dollars in 2008; and this small one – scroll way down - may restart a smelter which was considered as finally shutdown, because the LME prices forecast has turned more favorable: good news for the industry. And this smelter, which doesn’t often make the news but is silently doing a good job - scroll way down - will change hands and be able to undertake major investments. This country was for 4 decades an example of low cost, clean excess energy. - scroll down - It is going to change, due to a new tax policy, which is bad news for a greenfield presently in progress. This report underlines how China penetrates more and more the African market of aluminum and energy mega-projects. At home, the Chinese government opposes any extra capacity increase because metal production is running well under available capacity but this local aluminum producer plans, nevertheless, a one million tonne greenfield! And in India, another major greenfield with integrated power appears on our Capacity & Investment Forecast Matrix.
We initially forecast it, had hesitations later, and finally can check the old adage: “watch out for your first impression, it is the right one…” Click here to read the latest story.
Some events that may be considered as local or accidental indicate a major change of paradigm for investors in aluminum and energy, and for producers. Read Andre Teissier-duCros’s analysis here.
This old but sound European smelter (scroll way down) has its own power plant, therefore it invests. This African industrial zone – scroll way down - tries to save a dying greenfield project by expediently integrating a major energy capacity unfortunately fueled with gas. This Middle East project stays the course despite recession, because it has its own power. This Chinese producer, thanks to energy integration, can contemplate acquisitions. Meanwhile, this US smelter - scroll a bit further down - will survive, but only thanks to a renewed contract which doesn’t justify any extension. In Latin America, this greenfield in progress, with integrated energy, stays the course despite protests from local greens. And this future greenfield way down South on the globe, which depends on government for energy supply, has to wait.
The primary aluminum industry is showing signs that the end of the recession is not that far. Click here for a full report. LME prices seem to have hit the bottom and trends are encouraging for good reasons. Some of these long term trends, lead by one specific application of light metals (click here for another detailed report), will play a major part. This country is a major metal producer and is about to decide deregulating its energy market. One country prepares with Chinese help a colossal, integrated industrial zone including a smelter, which will utilize hydro energy already in full development. This other country is moving ahead in preparing a major hydro investment geared at future greenfields. And this other country decides finally to move ahead on an integrated energy/aluminum project which will be their first entry in the industry. This aluminum producer decides not to delay his most immediate greenfield project. This other country will launch a bit less than 6 Terawatts of energy capacity mainly to serve the aluminum industry, including new greenfields. This aluminum producer restarts some idled capacity, and this one - click here and scroll way down - plans to double capacity within 5 years, and begins with adding power capacity to its integrated plant. And this producer succeeds in concluding an agreement for the renewal of its energy supply under favorable terms. A fascinating saga keeps developing in Europe around this smelter due to shut down unless it is saved at the last minute by either of two options – scroll way down for a comprehensive update - to create or refit energy capacity. As well, click here and scroll way down to read the 5 decades story of this small country, now a major producer, who has gone full circle from cheap excess energy to facing difficult decisions arbitraging between aluminum strategy and local needs of the energy market, leading him to a decision regarding capacity expansion.
Whether this smelter (scroll down) will or won’t obtain a better energy contract will give a signal on the US Administration’s views on primary aluminum. Work on this smelter is now in progress, and the technology supplier is also providing financing under extremely favorable conditions. Meanwhile, all investments in primary aluminum and related supplies are delayed, cancelled or slowing down. Here is the complete list since early 2009. But there is light at the end of the tunnel: One of the major aluminum producers, which is not paralyzed by debt, (scroll down) is reviving an old greenfield project. and This full-scale pilot smelter greenfield, which will demonstrate the highest electrical intensity yet, obtains some extra Government financing to go ahead.
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