The ENAL Newsletter News Page
This aluminum producer is putting on stream 2.4 GW of dedicated power plants. This country is nationalizing its sole smelter and will certainly extend it in a few years. This country will for the first time demonstrate how a wind mill forest of 420MW can participate to the energy supply of its sole smelter. But two and may be three greenfields are dependent on a gigantic hydropower project which is almost completed but causing mega-scandals in their country: ecological, financial, controversial technology issues, corruption linked to cost overruns, etc. This small European smelter gets a long term loan: It is going to invest. Here is another country making the news because they consider a primary smelter for this first time; a sound project, but long term.This older smelter was plagued by energy shortage. It seems now that the government is putting its act together, in which case expect an extension. Will Iceland remain a Power Island enjoying cheap, clean energy? Well, read this. But this smelter close to completion, is now hurrying ahead after some delays.And this big smelter extension in North America, the soundest project on the continent, is finally progressing after endless political disputes. We expect it will start producing metal in 2012. This Indian greenfield is a cert, but it will have to relocate within India. This Indian extension should start producing in 2011. We remind you that Andre Teissier-duCros, our Publisher, will be a speaker on Nov. 25-27, at the ICSOBA 2010 conference. ICSOBA is the Int’l Committee for the Study of Bauxite, Alumina and Aluminum. This event is their 18th convention. We shall discuss challenges and opportunities for the smelter equipment industry facing macro-trends in world aluminium investment.
Andre Teissier-duCros, our Publisher, will be a speaker on Nov. 25-27, at the ICSOBA 2010 conference. ICSOBA is the Int’l Committee for the Study of Bauxite, Alumina and Aluminum. This event is their 18th convention. We shall discuss challenges and opportunities for the smelter equipment industry facing macro-trends in world aluminium investment. Context: The world demand for aluminum is fundamentally sound. It is sustained by two factors: The exceptional growth of demand in China, of Brazil (+25% consumption expected in 2010), but also of Europe where the automobile industry is huge and consumes more and more light metal in view of its slow conversion to the electric/hybrid car. World consumption outside China will rise by around 6.5-7.0 percent. But smelter operating costs remain hampered by energy costs. The way the industry will adapt to this context will deeply affect the equipment industry: new opportunities, but also new constraints. How? Andre will describe and discuss this situation while exposing the competition arena in smelter equipment. Meanwhile, recent events show that the aluminum industry must become politically more credible. This very promising greenfield was going to be the first one in this country, and its government finally forbids the project for reasons which gradually developed while the project was waiting for too long. This country was famous for its natural excess power and its impeccable smelters, but the future ones meet with ferocious opposition on political grounds. The same is true of this region (scroll down). Here is a far away region never heard of in the aluminum industry. Nevertheless its population has sent thousand of demonstrators to vandalize an existing smelter because of urgent pollution issues. This country is still assessed as ideal while waiting for its first greenfield, but the same issue may block the project. In this country, an old but viable smelter waits still waits for future investments that an energy dispute be settled. Here is another country which is more famous – scroll down - for its totalitarian regime. than for its energy or aluminum industry. Will it nevertheless build its first smelter thanks to a friendly neighbor? This country starts from almost nothing and plans for 13 nuclear plants within the next 20 years. And this smelter will shut down in China – scroll down - showing that it happens even in that booming country… This smelter waits a little more to be taken over by new owner and then invest. Brazil is compensating for his lack of primary capacity by investing in 2nd transformation.
The industry lives a paradox: In the short term, LME inventories remain high. Yet, in the long term, metal demand is obviously going to explode and wipe out excess capacity, most of which is located in China. Primary aluminum is no more seeking for the vanishing power islands offering excess power and therefore sweet long term rates, and is more and more participating to new energy investments. The leading utility in this African country is finally renegotiating intelligently long term contracts with the local metal industry and preparing for future investments. This country, an old timer in both hydropower and primary aluminum, is preparing a comprehensive investment program in new energy generation and metal recycling. This other country, a big aluminum producer traditionally lacking energy, undertakes investments in energy, primary and secondary capacity to counter a foreseeable metals trade deficit. This greenfield project is now engaging the procurement contracts for its first greenfield. This country has been waiting for ages for its first smelter. Now early construction stages are in progress. The first greenfield in this other country is at the same stage. This leading producer expects its country to absorb twice more aluminum in 2012.This western producer will invest in a new greenfield on the horizon to compensate for planned, but delayed shutdowns of obsolete capacity.These three projects were announced in ENAL some years ago. Our information is that they are only Dormant and may be revived soon. This western producer has only barely succeeded its IPO, raising some $100million which will not allow any significant change in productivity.
This country is a major aluminum producer and was a Power Island (world region categorized by the EIU as having excess, cheap power). Energy demand exploded to the point of creating a capacity deficiency and killing several major investment projects. Now the country engages a major consensus seeking debate between the main actors among producers and consumers. Watch out! This may revive more than one interesting project quite soon, because of a renewed awareness that primary aluminum is a powerful actor in terms of job and wealth creation. At a more modest level, this little known firm became an aluminum producer thanks to the purchase, while the going was good, of a smelter rated as non-competitive by its owner. Then it invested in power generation. And now it is on the move to acquire an energy generating firm in another country nearby… where there might be smelters for sale! In this country where construction of a greenfield already began, criticism of the project based on vivid environmental concerns brings the political debate to a very intense level and the public follows carefully. We estimate that the critics will fail: the country needs the business too much, and concerns are based on mis-information. In a country where the economy is slowly improving, this aluminum producer was in severe financial straits not so long ago. Now it is restarting idle capacity and will certainly invest. And so may this smelter nearby, which was lying idle and seriously plans a restart. This private aluminum producer has one old smelter which renegotiated its energy contract. Now the producer is going public. We expect small but badly needed investments. In this country, which enjoys a huge aluminum industry, the main producer plans now for major investments including integrating energy generation. Far away from there, this huge, highly competitive aluminum producer plans long term investments poising it for global expansion.
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.
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