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Alcan plans to meet aluminum demand

Saturday, Apr 28, 2007
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Alcan said on Thursday that it expects to tap surging demand for aluminum in the developing world with a slate of current and undisclosed expansion projects.

Alcan, the world's second-largest maker of primary aluminum, already has several big construction and expansion projects under way that will boost its annual smelter production capacity by some 1 million tonnes, or 30 per cent.

"There are a number of other projects that we are pursuing that are not yet public - stay tuned," Dick Evans, president and chief executive, told 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 per cent last year from just 2 per cent in 1980, Evans said in a speech to shareholders.

By contrast, the US share dropped to 7 per cent from 30 per cent, while Europe fell to 12 per cent from 22 per cent.

China's share of global aluminum consumption surged to 25 per cent last year - topping the United States at 22 per cent - from only 4 per cent 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, will be the world's longest aluminum smelting potline. Alcan has a 20 per cent 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 $US550 million ($A659.2 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 $US1.8 billion ($A2.16 billion) and 450,000 tonnes of new capacity in the region over 10 years.

On Thursday, Alcan unveiled a $US130 million ($A155.81 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 $US1.8 billion ($A2.16 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 was 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 $US58.91 on the New York Stock Exchange.

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