Rewind 2016: Top headlines of the global alumina industry

2016 has been a reasonably good year for alumina. The commodity, unlike other components in the entire cyclical asset basket, witnessed a sustained demand push all through, thanks to a global deficit market and prices kept rising supported by supply concerns arising mainly out of China. There were mergers and acquisitions, investments and divestures, closures and starting of new ventures as is common in almost every sector across industries. Now, that we gear up to begin a new year it’s time we take a look back at the events and phenomena that made headlines in the alumina industry in the last one year:


Market Ups & Downs:

1. According to the latest report provided by Altech Chemicals, the global market for high purity alumina (HPA) is forecast to reach 86,831 tons by 2024 from the current estimate of 25,315 tons, registering a growth of 343%.

2. Nearly 5.5 million tonnes of new and closed-down aluminium capacities in China are awaiting operation (re)-starts in the Q4 of the current fiscal and early next year. In comparison to that, new alumina capacity addition is estimated at only 6 million tonnes in the end of 2016 and 2017 beginning. Hence, there is going to be a clear deficit in alumina supply in the market which will buoy prices over the short term.
 
3. The General Court of the European Union issued judgments in joined cases upholding a decision of the European Commission ordering the repayment of tax exemptions granted by France, Ireland, and Italy for alumina production.

4. Nabaltec AG, the leading German supplier of functional grade aluminium oxide and aluminium hydroxide for numerous innovative applications, announced expansion of its operations in Asia in the first quarter of 2016 with the formation of a wholly-owned subsidiary based in Tokyo, Japan.

5. To survive the volatile commodity market, Hindalco Industries devised plans to sell its alumina plant and mines in Brazil. The sale deal is expected to be in the range of $90 million to $100 million.

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6. India's alumina producers sought anti-dumping duty exemption on caustic soda, a critical raw material and cost component of alumina production,

7. Nalco turned the world's cheapest alumina producer. The company's alumina production cost fell to $190 a tonne compared to the global benchmark of $220-230 per tonne. Nalco is aiming at further value-addition for its alumina produced in-house.
 
8. Hydro reported record alumina production at its Alunorte refinery in Q3 of the current fiscal.

9. CME Group announced first trades of Alumina FOB Australia (Platts) Futures.

10.China's Yunnan Aluminum Co. set an ambitious target for itself- to become 100 per cent self-sufficient in alumina by 2020.
 

 Amendments Made and Restorations Done:

• Alcoa Inc. and Alumina Limited agreed to make significant amendments to their AWAC joint venture before the former split into two different business entities- Upstream Alcoa and downstream Arconic in November 2016.

• RUSAL's BoD approved agreement on restoration of Friguia Alumina Refinery

• Vedanta revived second stream operations at its Lanjigarh alumina refinery

Mergers and Acquisitions:

There were not too many consolidations taking place in global alumina industry in 2016. The European Commission approved French minerals company Imerys’s proposal to acquire alumina producer Alteo ARC and Alufin GmbH Tabularoxid. The takeover is subject to certain conditions.

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Divestures and Closures:

1. Sherwin Alumina Co. announced plans to close its Gregory plant after its bottom line plummeted weighed on by a troubling combination of low demand and an oversupply from China. Its projected net operating losses were $42.1 million. Sherwin Alumina filed Chapter 11 bankruptcy in January.

2. Noranda obtained court approval to sell alumina refinery in Gramercy, Louisiana to DADA Holdings LLC.

3. Henan alumina refinery downed shutters amid danger of potential red-mud landslide.

4. RUSAL completed the sale of Alpart alumina refinery in Jamaica.

Project Status

1. Ma’aden subsidiary kick-started commercial production at its alumina refinery.

2. PT Shaanxi Youser Indonesia announced plans to build alumina refinery in C Kalimantan through a Chinese investor at a total cost of Rp16 trillion.

3. Production activities continued to progress steadily through 2016 at Orbite HPA plant.

4. Altech Chemicals awarded design and engineering work at its proposed Malaysian HPA plant to German firm M+W Group in Stuttgart.

5. EGA updated 60% completion of construction work at its Al Taweelah alumina refinery.

6. Nalco said construction at its Damanjodi alumina refinery will commence in February 2017

7. China’s Yunnan Aluminum announced plans to build large alumina project in Laos.

8. China Hongqiao Group’s large-scale alumina project in Indonesia succeeded in yielding output in 2016. The company will sell alumina from the project, whose annual capacity is one million tonnes, to China or Middle East within the next 1-2 months. Expected output for the project is 40,000-50,000 tonnes in May. Hongqiao Group is building another 1 million-tpy alumina project in Indonesia.
 
9. UC RUSAL invested US$2 million in Boksitogorsk alumina refinery modernization.

10. Shandong Nanshan Aluminum started construction of its alumina project in Indonesia in October.

11. PT ANTAM together with PT Indonesia Asahan Alumunium formed cooperation with PT PELINDO II in the port development in Sungai Kunyit, Mempawah, West Kalimantan. The port development is linked to Smelter Grade Alumina Refinery project in Mempawah.


R&D Highlights:

1. Orbite received Canadian fly ash patent and allowance for Russian red mud patent

2. Australian Renewable Energy Agency (ARENA) came forward to support a project led by the University of Adelaide and Alcoa that aimed using solar energy for alumina refining

3. Rusal announced the first time production of scandium oxide from red mud in its smelter in the Ural Mountains at a concentration rate that exceeds 99%.

4. Iranian and German scientists developed high-purity alumina nanoparticles using a green laboratorial method.
 
5. A team of materials science researchers from the Worcester Polytechnic Institute (WPI) started out to develop the first commercially viable process for recovering valuable metals from red mud, a hazardous generated in alumina refineries.

Altech Chemicals Ltd: World of HPA

According to global analysts, 2017 will see market balance for alumina getting restored as a host of new projects is already in the offing. But with the application area widening beyond aluminium extraction (use of alumina in biocompatible materials such as dental implants and joint applications is on the rise due to its bioinertness, hardness and high abrasion resistance) demand will remain buoyant supporting high prices though 2017 until 2022.