Thanks for the heads up on the West article, Kingrichard - is anyone able to post the article?
Looks like the PR machine has been activated for UMC....2 articles in the one day. Good to see, the story is a fantastic one. Hope management keeps the PR momentum going.
ALTHOUGH aluminium is the most traded commodity on the London Metal Exchange, it rarely receives as much attention as other base metals such as nickel and copper. When Rio Tinto splashed out $US38 billion ($43.5 billion) buying the Canadian aluminium producer Alcan this year, it had a lot of explaining to do, given aluminium price gains have severely lagged other metals gains during the commodities boom.
Rio's chief executive, Tom Albanese, said his company was looking at the forward curve - which was pricing aluminium higher than many analyst forecasts - and the possibility of a carbon-constrained world, which made Alcan's low-cost, hydropowered smelters look very attractive.
Given BHP Billiton waited until Rio had acquired Alcan to present its own combination proposal to Rio, it appears the Big Australian also has a bullish view on the commodity.
ANZ commodity strategist Mark Pervan last week noted aluminium was the only metal in which futures were trading higher than the spot price, even three years out. "The long-term outlook for demand looks very positive," he said.
Apart from BHP and Rio, the only Australian-listed miner with aluminium production is Melbourne's Alumina , and its sole asset is its 40 per cent share of the Alcoa World Alumina & Chemicals (AWAC) joint venture, the world's largest producer of bauxite and alumina.
Beyond exploration It's only been a month since Perth's Bauxite Resources listed on the Australian Securities Exchange to become the second pure-play alumina company after Alumina.
Bauxite has a 3000-square-kilometre landholding in Western Australia's Darling Ranges. The region boasts some of the world's lowest-cost alumina refineries, owned by BHP and AWAC. Both own bauxite mines and refineries south of Perth, closer to the port facilities at Kwinana, but Bauxite Resources' ground is about 50 kilometres north of the city.
Bauxite Resources is planning to revisit a feasibility study Pacminex prepared in the 1970s after drilling more than 10,000 holes. It plans a stage-one project which would ship about 1 million tonnes of bauxite a year to China, and a second-stage project involving a refinery built around bauxite production of 3 million tonnes a year.
"It's not a pure exploration play - it's much more advanced than that," a Bauxite Resources director, David McSweeney, says. "You have increasing demand coming out of China for alumina. I see a lot of similarities with bauxite and alumina and where the iron ore industry was four or five years ago."
High-energy venture It's been well known for at least 45 years that there's a lot of bauxite in the Kimberley - particularly in the undeveloped Mitchell Plateau project controlled by Rio - but a lack of infrastructure and energy has hampered development.
Two years ago, United Minerals pegged 6800 sqkm of open tenements in the region, and it is working hard to prove up a resource close to its targeted figure of 300 million tonnes, which could support a 2 million tonnes-a-year alumina refinery.
United quickly realised it lacked the financial resources to develop the project on its own, so it signed up Norway's Norsk Hydro as a joint-venture partner. Norsk, which is one of the world's top aluminium producers, agreed to take a 75 per cent interest in the project.
Alan Birchmore, the chairman of United's wholly owned bauxite subsidiary, Bauxite Australia, says new gas projects under development in the offshore Browse Basin should give it the energy needed to construct an alumina refinery.
China finds an appetite In Australia's other major bauxite state, Queensland, Cape Alumina is busy proving up resources at its Wenlock project in the high-grade Weipa bauxite province on western Cape York.
Cape expects to list next year with a market value of more than $100 million but in the meantime, investors can gain exposure to its projects through its 40 per cent shareholder, Metallica Minerals.
Cape's first objective is to produce bauxite for the Chinese market. Next is to build an alumina refinery. It hopes to prove up 130 million tonnes of bauxite by the end of next year and to export up to 7 million tonnes a year. China's second largest alumina refiner, Chiping Xinfa Huayu Alumina, owns 17.5 per cent of Cape and might be a major customer for the bauxite.
Cape's chief executive, Paul Messenger, says there used to be few independent bauxite or alumina producers because its a very capital-intensive industry. Until recently, there hadn't been a bauxite export market to China, but now Indonesian, Indian and Australian producers are all benefiting from growing demand there.
cheers Marny
UMC Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
