** *CRUGroup.com Week in the News - **ALUMINIUM*
*Sapa *has completed* *its purchase of the assets of US extruder, *Indalex*. Under the agreement, Sapa will acquire six US and four Canadian active plants, including 29 presses along with a total capacity of around 315,000 tpy. The company also paid cash sums and assumed liabilities for the U.S. and Canadian assets (see Industry News, July 10, 2009). As a condition of sale, Sapa has agreed to sell either its aluminium sheathing plant in Catawba or Indalex’s facility in Burlington, both in North Carolina. * * *Qatar Industrial Manufacturing Company (QIMC) *has announced plans to set up a QR72m (US$197.8m) aluminium extrusion plant at its ‘New Industrial Area’ in Qatar. QIMC will have a 40% stake in the plant, with the remainder held by Qatari shareholding companies. The plant will produce aluminium profiles in different graded alloys for the construction and industrial markets, and is expected to come onstream by the end of 2010. * * *Rexam *has shut down its Dmitrov beverage can factory in Russia citing continued weakness in the domestic market as the reason. The closure of the plant will reduce Russia’s annual capacity by around 1.3 billion cans, but is expected to save the company £20m (US$33.9m) in 2010, while safeguarding the company against the recession. * * Denmark’s *FLSmidth* has reportedly received an order worth approximately 100m Danish kroner for the construction of a gas suspension calcination system from *Anrak Aluminium Ltd.*, India. The supplied equipment will be used at Anrak's 1.5m tpy alumina refinery located 65km from the city of Visakhapatnam, Andhra Pradesh. The contract includes design, engineering and supervision for the entire equipment package. The scope of supply comprises a gas suspension calciner, hydrate storage and reclaiming equipment, pan filters, baghouse filters, a pipe conveyor and a material handling system for two 25,000 tonne silos. *Century Aluminium* has announced plans to transfer its ownership stakes in the Gramercy alumina refinery and St Anne’s bauxite mine to subsidiaries of privately held *Noranda Aluminium Holding Corp*. CRU understands that both facilities are currently operating with a capacity of 50% or less. It is believed that the transaction will allow the company to focus on its aluminium smelting business. *COPPER* * * *Luvata*, a copper semis fabricator, believes that even though destocking in the copper supply chain is over, a significant rise in demand is not anticipated until mid-2010. The company expects that *Asia* will be the first region to recover, followed by *North America* and *Europe*. As a result of destocking, Luvata has got used to operating at a lower level of stock, and therefore became more efficient in its production procedures. The company intends to keep operating at lower stock levels even in periods of growth. While demand before the summer showed some recovery signs, the company is now waiting for the autumn to see whether the positive trend will continue. *Japanese *copper semis fabricator *Furukawa Electric* announced that in Q1 of fiscal year 2009 it suffered group net losses of ¥3.51 billion (US$37.1 million) compared with profits of ¥6.89 billion (US$72.7 million) in the same period of 2008. Revenues in Q1 FY2009 amounted to ¥166.74 billion (US$1.76 billion) vs. ¥287.04 billion (US$3.03 billion) realised in the same period of 2008. For H1 FY2009, the company is expecting to achieve group revenues of ¥376.00 billion (US$3.97 billion) whilst for the full FY2009 ¥807.00 billion (US$8.52 billion). Unionized employees went on strike at *Vale’s* Canadian operations in * Sudbury* (12th July) and *Voisey’s Bay* (1st August) after rejecting the company’s offers for new three-year collective labour agreements. At Voisey’s Bay, the strike affects 120 employees. Voisey’s Bay operations were temporarily closed in July and were due to restart on 1st August. Sudbury together with Vale’s *Port Colborne* operations began a eight-week shutdown on 1st June and were due to restart on 27th July. On 3rd August it was reported that Vale declared *force majeure* at Sudbury. In 2009, Sudbury and Voisey’s Bay were expected to produce 38,000t and 19,000t, respectively, of copper in concentrates. On 30th July, *Copper Mountain Mining Corporation (CMMC)* announced that it had signed definitive agreements with Mitsubishi Materials Corporation for Mitsubishi to acquire a 25% interest in the *Copper Mountain* project in British Columbia, Canada, for US$28.75M. *Mitsubishi *also agreed to purchase all copper concentrate output from the mine. Copper Mountain is scheduled to restart operations in 2011 and will produce 43,000t/y of copper in concentrate. It was announced on 22nd July that there is an electrical problem with one of the main conveyor belts at *Collahuasi* in Chile. The main conveyor belt is 7km long and delivers ore from the open pits to a 400,000t capacity stockpile, which then feeds into the adjacent concentrator via a smaller conveyor belt. The company said it will lose 5% of this year’s production and that the repairs will take place in the next two months. Prior to this disruption, CRU had expected Collahuasi to produce 425,000t of copper in concentrate in 2009, and 59,000t of SXEW copper cathodes. * * * * *LEAD AND ZINC* * * In the first half of 2009, *OTZK* produced 12,000t of refined zinc and 10,800t of refined lead at its Kardjali smelter in southern Bulgaria, both down 11% year-on-year. The company said that the fall was mainly due to ‘technical reasons’ and that it would produce at a higher rate in the second half of this year in order to hit its full year target of 27,000t of refined zinc and 24-27,000t of refined lead. *Teck* has announced that it will return refined zinc production at its Trail operations to 25,000 tonnes per month from 1st September in response to strengthening customer demand. The smelter has been operating at just 80% of this level since December. The company noted that some orders from a number of steel mills for the second half of this year are 44% higher than they were in the first half of the year. *Reuters* has reported that *Doe Run Peru* has approached Indecopi with a view to arranging a restructuring plan that would give it protection from its creditors’ claims. Indecopi is the government body that regulates bankruptcies in Peru. It added that any decision to allow the company to move into bankruptcy or not would take months. * * * * *NICKEL* * * An official of the union representing striking workers at *Vale Inco’s Sudbury* operation has predicted that the company will ‘for sure’ declare force majeure on nickel shipments from Sudbury when stockpiles deplete by mid-August or early September. Vale Inco’s facility at Thompson, Manitoba, was closed for a month last week, and a strike began at its Voisey’s Bay mine this week. *CRU view**: With nickel topping $20,000/t this is not a great time to be saying goodbye to even a single tonne of production, so Vale Inco has a tough dilemma in toughing it out with the unions. But the company has set its sights on cutting expenses at a property where costs have been escalating in recent years. Our refined output estimates for Vale Inco in Canada are 143,400t in 2008 and 102,000t in 2009, and UK output (41,000t in 2008, perhaps 33,000t this year) is also likely to be affected. Our mine output estimates for Vale Inco in Canada are 191,600t in 2008 and 145,700t in 2009.* *PT Inco* plans to cut 87 jobs at its operation in Indonesia to reduce costs ‘in response to the global economic crisis’ a company official announced this week, but the measures will not affect production. * * *CRU view**: Could someone let them in on the secret: the economic crisis is over. (It ended the day the banks got their taxpayer bailouts and governments began to pump up their deficit spending). What we have now is not crisis but some familiar hangover pains and a perfectly respectable recovery. That’s why the markets have been racing away. As for PT, our production estimates are 72,400t last year and 64,800t this year.* * * *PT Aneka Tambang* production fell 33% in the second quarter, due to work on the FeNi III smelter project. The company expects the FeNi II plant to be back on line in September, with this year’s overall production target unaffected. * * *CRU view**: Our estimates for Aneka Tambang output are 12,000t Ni this year, compared with 18,800t last year.* * * *Mirabela Nickel* has announced the start of mining operations at its Santa Rita property in Brazil. The mine will start at 4.6m tonnes of ore a year, rising to 6.4m tonnes a year in the second quarter of 2010. * * *CRU view**: Having proved up the deposit only five years ago Mirabela deserves to be pleased with its venture. Our output estimates are 3,300t Ni this year, 15,000t next year, 20,000t in 2011 and 25,000tpy thereafter. * * * *Mincor Resources* has announced that having suspended operations in late December it will not reactivate its Miitel mine this year because nickel prices remain too volatile. The concentrate output from the mine was shipped to the Kalgoorlie smelter at the time of its closure. *CRU view**: It will be a strange world when nickel stops being a volatile business, but this is a reminder that not everyone is rushing to reactivate shuttered nickel operations. Miitel was one of the new generation of medium-scale conventional mines opened in the early 2000s and produced 12,100t Ni last year. * * * *Jinchuan Group* will take over Zambia’s *Munali* mine next month, after assuming over 70% of the shares in the operation. Production capacity is around 10,000tpy Ni but the mine has been closed since March. *CRU view**: Munali is a high cost operation, but Jinchuan clearly needs the feed urgently and is prepared to ship concentrate from the heart of central Africa.* *Sherritt International* has posted a 70% fall in second quarter profit, but its production targets seem to be intact as it expects to produce 33,500t of nickel this year. Meanwhile the company is contesting claims from the new ruler of Malagasy that the *Ambatovy* project’s eligibility certificate may be invalid. *CRU view**: Sherritt’s existing operations tick over pretty steadily; last year’s output was 32,400t Ni. The hiccup on Ambatovy seems unlikely to delay development, but we are projecting first output for 2012, with a gradual build-up to 63,800tpy from about mid-decade on.* Spanish stainless steel maker *Acerinox* has reported* *a loss of €255m for the first half of 2009 but expects positive results in the third quarter and a pick-up in demand in the fourth quarter, citing a recovery in demand in recent months, a consolidation of price rises, higher order books and low levels of stocks. * * *CRU view**: Acerinox has been perhaps the worst hit of the European stainless groups and had to cut production (at mills in Spain, the US and South Africa) by an average 50% for most of the first half of the year. Currently business has picked up well in northern Europe, and one of Acerinox’s peers is running at 100% of capacity. The catalyst has been restocking by distributors and end-manufacturers. Key question is – will there be a good follow-through by end-demand?* * * *TIN* * * *Peru's Minsur SA* reported second quarter net income of 242.7 million soles (US$81 million), 28% lower than in the same period of 2008. This was a major improvement compared to the 132.6 million soles ($44 million) achieved in the first quarter. The changes mainly reflect tin price movements, as tin production volumes have been fairly stable. Minsur operates the world's largest tin mine, the *San Rafael* operation in the southern department of Puno and a smelter in the southern coastal city of Pisco. Official figures released recently showed that the company's tin-in-concentrate production declined by 5.3% year-on-year to 18,486t in January-June. *Cookson Group PLC,* the world's largest tin consumer, reported an improvement in market conditions and profitability from March of this year onwards, although underlying sales of electronic assembly materials - which includes its solder business - were down 34% year-on-year in the first half of 2009. The company reported a trading profit on its electronics business of UK£6.8 million (US$11.5 million) in Q2 following a loss of £0.5 million (US$ 0.8 million) in Q1. Sales of assembly materials in the first half totaled £138 million (US$ 233 million), while total electronics sales (including electro-plating chemicals) were £240 million (US$404 million). *Cookson* has seen sales of electronic materials pick up since March, as end-markets progressively improved as the customer de-stocking phase has ended and demand has recovered. Industrial and automotive markets (one-third of revenue) have continued to be weak throughout the first half. The company saw comparatively better performance of solder paste sales (volumes down 19%) versus more commoditised products such as bar solder (volumes down 41%). The company has increased secondary tin production, particularly in China, where a new facility in Guangxi province became operational at the end of 2008. Cookson has taken steps to reduce costs, including a reduction of 11% of the European workforce (340 people). * * * * *PRECIOUS METALS* * * *Moto Goldmines*, which owns 70% of the Moto gold project in the Democratic Republic of Congo, has accepted Randgold Resources’ takeover offer. Accordingly, Red Back Mining has withdrawn its rival acquisition bid for the company. The Randgold transaction, which values Moto Goldmines at just below $500 million, is structured, such that Moto shareholders receive 0.07061 of an ordinary Randgold share or $4.47 in cash for every Moto share. The cash portion of the transaction, capped at $244 million, will be funded by AngloGold Ashanti as partial payment for a 50% interest in the Moto gold project, and project development will be jointly co-funded by Randgold and AngloGold. Based on a March 2009 feasibility study, the project contains 42.3 million tonnes of probable reserves, at 4g/t of gold, for 5.5 million ounces of contained gold. The mine could begin operating in 2012.
