Alcoa's CEO Touts Growth Plans As Shares Lag

Alcoa Inc. has been a laggard among global mining companies even as industrial commodities surge, but the aluminum giant's chief executive is hoping investors will begin to take more notice of the company's growth plans.

Part of the reason Alcoa's stock price is about the same as it was this time last year, at around $13 to $14, is that some Wall Street investors are hesitant about, or unaware of, the company's expansion, CEO Klaus Kleinfeld said in interviews Wednesday.

In the past year, it is been ramping up or improving facilities in Brazil, China, Russia and Saudi Arabia. Kleinfeld is also moving to reprice how alumina, the key ingredient along with bauxite in the production of aluminum. Repricing alumina to be sold on the spot market would make Alcoa more profitable.

Pittsburgh-based Alcoa's new bauxite mine in the Amazon jungle will be ramped up to full production by the end of this year, the company said Wednesday. The company's $2.2 billion Juruti mine in Brazil will produce an initial output of 3.3 million tons by the end of the year.

So far, the market has yawned.

"In the end, it is taking a while until confidence comes back," Kleinfeld said. "I'm fairly optimistic we are on a good path."

Kleinfeld is trying to reshape the company to let investors know that it is not just an aluminum maker.

"We've let investors believe that we are all about aluminum only," he said.

While aluminum prices have recouped some of their losses during the recession, the metal's gains have modest when compared to the likes of surging gold or copper. One reason is that above-ground aluminum stocks are fairly large. London Metal Exchange warehouse inventories on Wednesday stood at more than 4.2 million metric tons, close to their record highs of above 4.6 million tons in January.

But Kleinfeld said he is bullish on aluminum prices over the long term as global population and urbanization continue to grow.

"In the 10-year time frame, we are going to see a doubling in demand," he said.

He added that he is not concerned about moves in China, the world's largest commodities consumer, to cool its economic growth. The Asian nation will still consume aluminum at a voracious pace even if it reduces its gross domestic product growth by a percentage point, he said.

A Dow Jones poll of 12 economists showed China's industrial output and investment remain relatively stable, despite such measures this year as the first interest rate increase in almost three years in October and continuous moves to cool its property market.