Alcoa Begins Operations of 60,000-Ton Aluminum-Coating Line in Russia

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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading global aluminum producer Alcoa Incorporated (NYSE:AA) (Pittsburgh, Pennsylvania) has started operations of its 60,000-ton-per-year coating line at its Samara plant in Russia. The facility will produce state-of-the-art coated aluminum, which will find use in beer and soft drink cans as well the construction and building industry. The new manufacturing line will be the only one of its kind in the country and will catapult Alcoa to the leading position in the category of can-materials production.

Presently, the Samara plant is the only can-stock manufacturing unit in Russia. With the inauguration of the new coating line, Samara, which earlier manufactured only stock for can bodies, will now cater to Russian demand of tab and end-stock as well. Painted sheets, which are used in building structures and other construction activities, will also be manufactured at the plant. The products manufactured in the Samara facility will not only meet requirements of Russian customers but will also cater to the needs of the European market. While domestic customers can have the option of purchasing locally, overseas buyers can also benefit from economies of scale by procuring raw materials from a single source. The operations of the new line will not only boost economic activity in this region, but also will create new jobs. The first delivery from the plant was scheduled for June.

In 2005, Alcoa purchased the Samara facility from Rusal (Moscow, Russia) and embarked on a $750 million investment plan to refurbish the facility. The Samara plant is Russia's largest fabricated aluminum-production facility, catering to about 40% of the mill-products market. The coating line will process aluminum coils with varying thicknesses, ranging from 0.15 millimeter to 0.8 millimeter, at a rate of 250 meters per minute to produce sheets with widths of 1,050 millimeters to 2,050 millimeters. The fully automated production line has a combined input and extract ventilation system in the coating room that can turn over the air 60 times in an hour. The commissioning of the coating line is part of Alcoa's $750 million investment program to bring the Russian operations to global standards. The investment plan also includes the development of a high-quality production line for fabricated aluminum and large-scale forging units for the aerospace sector.

The commissioning of the coating line in Russia comes at a time when Alcoa is exploring options of selling off similar downstream business units in other parts of the world. Alcoa has also been contemplating reducing capacity after the prices of its products fell below production costs in early 2009. The investment is also seen as a signpost for a revival for the Russian economy, which has become seemingly unattractive to investors because of the recession and the country's undeveloped infrastructure.

In a recent development, the company announced that it was acquiring the intellectual property rights for aluminum welded risers used in oil exploration from Noble Corporation (NYSE:NE) (Sugar Land, Texas). Noble Corporation, a leading offshore drilling contractor, designs and uses welded aluminum rising units based on Alcoa's advanced forging and extrusions. The aluminum risers are not only less expensive and weigh 40% less than conventional systems, but also are non-corrosive, low on maintenance and easily transportable. The intellectual property rights can help Alcoa work with leading oil and gas companies to develop lightweight risers for deepwater applications. Alcoa, which is the world's third-largest aluminum producer, produces fabricated and primary aluminum and also manufactures hard alloy and aluminum extrusions, flat-rolled products, fastening systems, building casting and forging products.

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