Week in Review: Mergers and technology tie-ups mark Primary Aluminium amid volatility

Primary aluminium industry this week was abuzz with news of big companies merging to create leading global entities, aluminium smelters signing technology partnerships with automation giants, and India showing strong aluminium demand prospects for the long-term.

Here’s a review of the news that made an impact in the world of aluminium:

Aluminium Bahrain (Alba) announced that it has resumed all power operations after power outage happened at its complex on April 5. The company said it expects to suffer a loss of 3% to 5% of its total production for 2017 due to this incident. Reduction Lines 1-4 are operating at normal levels though Reduction Line 5 is running partially and is expected to be fully operational by early Q3 2017. The company safely managed through the incident with no injuries.

Vedanta Limited and Cairn India Limited announced Wednesday that their merger has become effective now. This merger consolidates Vedanta’s position as one of the largest diversified natural resources companies of the world, with best in class, low-cost assets in Metals & Mining and Oil & Gas. The merged company will have a larger pro forma market cap of $15.6 billion and higher free float of 49.9% and one of the strongest balance sheets. S&P Global Ratings Agency recently said in a statement that it expects the merger to improve Vedanta's financial flexibility in the coming quarters.

Vedanta Resources also released their production report for the Fourth Quarter and Full Year ended 31 March 2017 and registered record annual production for the aluminium segment. Vedanta reports a record aluminium production of 353,000 tonnes in Q4 FY 2017, registering a growth of 11% QoQ and 56% higher YoY. This was attributed to production ramp ups at the Jharsuguda-II and BALCO-II smelters which are taking place on schedule, following the pot outages during 2016.

Leading automation technology provider Outotec has agreed with Aluminium Bahrain B.S.C. (Alba) on the design and delivery of anode rodding shop facility for ALBA's aluminium smelter expansion in the Kingdom of Bahrain. The scope of delivery includes process engineering, proprietary and other process equipment as well as procurement and construction. Once operational this will be the world's most modern rodding shop.

CME Group announced its intention to close its London-based derivatives exchange and clearing house, CME Europe and CME Clearing Europe, by year-end 2017. During the coming months, CME Group will work closely with all market participants and regulators to ensure a smooth transition and an orderly wind down of business operations, including the provision of CME Group market alternatives for actively traded products on CME Europe.

An industry source reported that Indian aluminium giant Nalco is set to join the club of million-tonne producers in the segment by 2020. The aluminium producer has readied about INR 25,000 crore of investment to expand its aluminium, alumina and power capacities.

The giant Tomago aluminium smelter has put itself forward as a foundation customer for any low emissions coal-fired electricity generator to be built in the Hunter Valley as it warns continued power supply instability and rising prices threatens its future. With the plant accounting for 12 per cent of NSW’s electricity consumption, a commitment from Tomago would help underwrite any new power plant.

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South32 announced Monday, 10 April, that the company has signed a three-year strategic partnership agreement with GE, the world's Digital Industrial Company, in Sydney. The partnership will help in the development of South32’s technology roadmap and activation of the Company’s digital transformation.

Rating agency ICRA projected that the long-term demand for aluminium would continue to be positive in India driven by investments in infrastructure projects for the power transmission and distribution sector, urban housing and smart city programmes of the government. In the first nine months of the financial year 2017, the rise in consumption of aluminium remained at 10 per cent because of the demand from the power transmission and distribution and the automobile sectors.

Turkey’s aluminium import in last three years peaked in 2016 with the total volume imported reaching 1.05 million tonnes (1052855.025 tonnes). The figure mirrored an impressive double-digit growth (23.3 per cent year-on-year) in demand that was made possible due to robust productivity enhancement in the downstream sectors.