Aloca eyes $1bn alumina upgrade
SYDNEY, Australia (Reuters) - -- An Alcoa-led joint venture says it is studying a $1.1 billion expansion of alumina output at its Australian Wagerup refinery, joining rival BHP Billiton in upping production to keep pace with demand in China.
An expansion of the Western Australian refinery would add a third production line and was one of several options U.S.-based Alcoa Inc said it was looking at to meet demand for the aluminium-making material.
The expansion work would add a further two million tonnes of annual production, according to a statement by the Western Australia government Thursday.
Earlier this week, rival and sometime partner BHP Billiton allocated $165 million to add a further 250,000 tonnes of annual alumina making capacity to its Worsley refinery. Both refineries are in Western Australia. (Full story)
Meanwhile, Comalco, the aluminium unit of Rio Tinto, is readying a new refinery in eastern Australia for its first shipments in January.
Resource suppliers are struggling to match demand for raw commodities such as alumina, coal and iron ore in China, the world's fastest growing economy by a long shot, as its manufacture of finished products outpaces production of raw materials, causing factory operators to curb production runs.
China's Henan Dengfeng Aluminium Co last month said it would be forced to cap output at around 120,000 tonnes this year, 20 percent less than capacity, owing to an alumina shortage.
Cutting emissions
Alcoa, which has been criticized by government health authorities over the refinery's emissions record, said it had spent heavily on a comprehensive emission reduction program.
"We have been working in good faith with the local community to restore confidence and strengthen the future prospects of the community and the region, Alcoa World Alumina Managing Director Wayne Osborn said in a statement.
Wagerup is owned by Alcoa World Alumina Australia, which is 60 percent owned by Alcoa, the world's largest alumium maker, and 40 percent by Australia-listed Alumina Ltd.
The venture last year earmarked A$400 million to expand its Pinjarra alumina refinery, also in Western Australia by 2005.
That expansion will lift annual output of the material used to make aluminium by 600,000 tonnes to four million tonnes.
Until recently, it held the stance that Pinjarra alone would fill projected market needs.
The joint venture operates three refineries, all in Western Australia, accounting for 7.7 million tonnes of alumina a year.
It takes about two tonnes of alumina, derived from four tonnes of bauxite, to make one tonne of aluminium.
Alcoa has said it hopes to more than double production of alumina at sites in Brazil and Jamaica in projects costing about $1.35 billion in response to growing consumption of aluminium, used widely in packaging, construction and automaking.
Alcoa, with total production capacity of about 14 million tonnes a year, aims to decide on the expansion in Brazil and Jamaica in the second half of this year, and to complete the projects in 2007.
