Alcan's Australian Alumina Expansion Adds 30% to Group Capacity

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). The $1.3 billion expansion plans now underway for Alcan's Gove alumina refinery in the Northern Territory of Australia will see the plant's capacity rise to about 3.8 million tons per annum from the current capacity of 2.1 million tons. Initial work at the site will begin in October, with construction due to start by the end of the year.

The state government approved the EIS (environmental impact statement) in July, but requires Alcan (NYSE:AL) (Montreal, Canada) to meet stringent requirements, including undertaking a study on the social impact of the development on the remote township of Nhulunbuy. The EIS is due for release at the end of 2004. The good news for the 4,000 locals is that 1,700 jobs will be created at the peak of the project's construction phase and 120 permanent jobs when the refinery is fully operational in 2007, with 70 of those jobs going to locals.

The project also brings good news for the general development of the region through a secure gas supply agreement, which will see 40 petajoules of gas per annum delivered to Gove from the Blacktip offshore field. The gas will be delivered from the offshore site via a 110-kilometer undersea pipeline to an onshore gas processing plant at Port Keats. From there the gas will be transported through a 950-kilometer onshore pipeline to Alcan's bauxite mine and alumina refinery at Gove far to the northeast of the territory. Transport of the gas from the onshore plant to Gove is being developed by the Trans-Territory Pipeline Project and does not form part of the Blacktip gas project. The joint venturers in the Blacktip field are Woodside Petroleum (ASX:WPL) (Perth, Australia) and Eni (NYSE,MILAN: ENI) (Milan, Italy).

Richard Yank, President of Alcan Bauxite and Alumina Pacific Operations said that in addition to the refinery expansion, the $360 million pipeline would act as a catalyst for future projects at the site. He said that the project would bring Gove to a capacity that is comparable to the largest and best performing refineries in the world and when completed would increase alumina exports from the refinery from $400 million to $700 million a year. Alcan will also be pursuing additional benefits that would flow from converting the refinery to gas. The expansion plans had not been made on the condition of a gas supply, he added.

The investment in the project is the largest ever made in the Northern Territory. Chief Minister, Clare Martin said that it was bigger than the Alice to Darwin railway and the Whickham Point LNG plant. Aboriginal traditional owners have indicated, through the Northern Land Council (NLC) that they would like to buy an equity stake of up to $70 million in the pipeline project, which crosses Aboriginal land covered by native title claims.

Travis Engen, President and CEO of Alcan, said that the Gove expansion represents a close to 30% increase in Alcan's overall alumina capacity. Michael Hanley, President and CEO of Alcan's Bauxite and Alumina group said that the Gove low-cost capacity expansion would result in Alcan having well over 50% of its alumina production in the first quartile on the global cost curve. By improving raw material efficiencies, reducing operating costs as well as improving environmental performance, this investment secured Alcan Gove's long-term sustainability, he said.