Alcan to tap developing world's aluminum demand

Alcan's annual meeting in Montreal.

Evans said the developing world, especially China, will account for the bulk of growth in demand.

China's share of global aluminum production increased to more than 28 percent last year from just 2 percent in 1980, Evans said in a speech to shareholders.

By contrast, the U.S. share dropped to 7 percent from 30 percent, while Europe fell to 12 percent from 22 percent.

China's share of global aluminum consumption surged to 25 percent last year -- topping the United States at 22 percent -- from only 4 percent in 1980.

"The implications for growth in demand as China's economy continues to develop are clearly enormous. It could more than triple," Evans said.

In primary aluminum, Alcan has three key projects under way, including a 350,000 tonne smelter at Sohar in Oman that, at 1.2 kilometres (three-quarters of a mile), will be the world's longest aluminum smelting potline. Alcan has a 20 percent share of the smelter, which is expected to begin production in mid-2008.

In Jonquiere, Quebec, the region where Alcan has the bulk of its Canadian smelting capacity, a $550 million pilot project using the latest technology is in progress.

The pilot plant is slated to produce 60,000 tonnes of aluminum annually, but the overall project will burgeon to $1.8 billion and 450,000 tonnes of new capacity in the region over 10 years.

On Thursday, Alcan unveiled a $130 million project to build a high-efficiency turbine at its Shipshaw power plant in the region. Much of the Quebec smelting capacity is supported by the company's own power generating plants.

In South Africa, Alcan is moving ahead with a plan to build a 720,000-tonne smelter. It has a long-term power agreement for the Coega plant there and is talks with prospective partners for the project.

Two major projects are stalled: the $1.8 billion expansion of the Kitimat smelter in British Columbia, and a plan to add capacity to its ISAL smelter in Iceland.

Alcan expects the Kitimat project to get back on track with a new agreement in the works on surplus power sales from its generating facility to BC Hydro.

Evans said Alcan is reviewing its options for ISAL after a local community narrowly rejected the project in a referendum.

"The project is delayed until we feel that we have the needed community support," he said.

Alcan shares fell 22 Canadian cents to C$66.03 on the Toronto Stock Exchange and were down 57 cents at $58.91 on the New York Stock Exchange.

($1=$1.12 Canadian)