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26 AUGUST 2016 AL CIRCLE

Alpart restart will put downward pressure on alumina prices, says consultant

EDITED BY : DIPANWITA GUPTA 3MINS READ

Noted Jamaican aluminium industry analyst Terece Muir, who is currently working with CRU Analysis, opined that the plans drawn by the Chinese firm Jiuquan Iron and Steel Company (JISCO) for its recent buy- Alpart alumina refinery stand to raise concerns about the likely impact of the plant's operations on alumina and aluminium prices in the international market.

Muir said in a recent communication, "Near term, there is some concern that the restart of Alpart, as early as 2017, will raise the alumina surplus in the world excluding China, and add downward pressure to alumina spot prices."

JISCO, soon after buying the Alpart alumina refinery from UC Rusal laid out plans for major expansion at the plant. They also intend to set up a thermal-powered aluminium smelter in Nain, St Elizabeth, where the plant is currently located.

Muir, an erstwhile project engineer at Alpart, pointed out that the JISCO-owned smelters in China have huge aluminium capacity estimated at 1.7 million tonnes; even if Alpart is operated in full capacity, the alumina produced at the refinery will not suffice for the total need in the near term.

"JISCO is the fifth-largest aluminium producer in China. JISCO currently does not own any alumina-refining assets in China. The desire to back-integrate would be a driving force behind a purchase of alumina assets in the Atlantic, a market that is well supplied in alumina," she said justifying JISCO's decision to acquire Alpart.

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Muir, however, also didn't hesitate to add that JISCO, at the moment, faces a risk of cost-escalation in shipping alumina produced at Alpart refinery to its offshore smelters in China.

"Intrinsic in the purchase of Alpart, an asset so far away from China's mainland, is the risk that rising freight and rising crude oil prices will raise delivered alumina costs," she said.

"It is unclear whether or not they are going to start building the smelter now, from the reports that I have gotten so far. It's possible they can bring on stream the alumina refinery and have that running for a while before they choose to invest in a smelter ... but it's something to watch because sometimes you will see companies announce plans to start up and they may start one section and not follow through with the other part of the plan. But it depends on how the market recovers," she elucidated.

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EDITED BY : DIPANWITA GUPTA 3MINS READ

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