Pechiney in Aluminum Growth Mode

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Pechiney SA (NYSE:PY) (Paris, France) is in the process of buying the equipment at the McCook Metals LLC mill located in McCook, Illinois and has announced its plans to shut down operations and transfer equipment to its plants in West Virginia and France once the deal is done. Privately-held McCook Metals LLC, owned by Michigan Avenue Partners, is in the process of downsizing its McCook aluminum sheet and plate rolling mill. In the last two weeks, the company layed off 200 hourly and 15 salaried employees, reducing total employment at the mill to around 50 people. Just a year ago the company had 500 employees working at the mill. The company filed for Chapter 11 bankruptcy protection in the summer of last year due to economic reasons and was put on the auction block where Pechiney successfully bid for the assets.

The acquirement of the McCook assets by Pechiney is one of a series of acquisitions and expansions that Pechiney has executed in recent years and the company has plans for more. The company announced early this year its intention to spend in excess of $500 million on acquisitions and expansions over the next three years.

Pechiney entered the U.S. aluminum manufacturing market in late 1999 with the acquisition of Century Aluminum's Ravenswood, West Virginia aluminum sheet and plate mill and a cast aluminum plate mill in California. Soon after the acquisition, the company initiated a capital improvement program at the Ravenswood mill and is now nearing completion of a $50 million expansion to increase the Ravenswood rolling mill capacity up to 60 million pounds of aluminum sheet a year. Pechiney used Voest-Alpine Industries Incorporated (Canonsburg, Pa.) to turnkey the revamp of the hot and cold rolling mills at the site.

Worldwide, Pechiney is planning expansion in all corners of the globe. In 1998, the company began studies for an alumina refinery in Baleshwar, India. Most recently an aluminum refinery is being studied in China. The company is planning to construct a new world class aluminum smelter in Port Elizabeth, South Africa. The smelter will use Pechiney's latest AP50 technology and produce around 460,000 metric tons per year of primary aluminum.

The company has also been studying smelter additions or expansions in Australia, South America, and the Netherlands. The company just announced plans to expand its joint venture Tomago smelter in Australia. The South American project was to be located in Puerto Ordaz, Venezuela. The two phase $750 million project would ultimately produce 500,000 tons of aluminum annually. Late this year, the company should begin construction of a $100 million expansion of its Vlissingen, Netherlands aluminum smelter. "Industrialinfo.com has tracked over $1 billion in aluminum projects for Pechiney in recent years," according to Joseph Govreau, Manager of Metals and Minerals for Industrialinfo.com. "Many of these are in the early planning stages and a few have advanced to engineering and construction stages."

Pechiney is the world's fourth largest aluminum producer.