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Alumina Says Aluminum Demand May Gain 10% This Year (Update1)
May 7,2010 11:22CST
industry news

MELBOURNE, May 7 -- Alumina Ltd., partner in the world's biggest producer of the material used to make aluminum, said demand for the metal may increase 10 percent this year because of stronger consumption in China and India.

"The market we operate in is still challenging, but the outlook is improving, and is now significantly above the lows of 2009," Chief Executive Officer John Bevan said today in speech notes for the Melbourne-based company's annual general meeting sent to the Australian stock exchange.

Alumina is targeting record output this year of alumina, which is refined into aluminum, through its joint venture with Alcoa Inc., Bevan said. Alumina may swing to a profit this year as demand rebounds from the lows of the global economic crisis.

Alcoa said this week a proposed 40 percent profit tax on mining companies in Australia risks driving investment and jobs away from that nation. About 80 percent of Alcoa of Australia's revenue stays in the country through wages, local purchasing, taxes, capital investment and dividends, Alcoa's managing director in Australia Alan Cransberg said May 5.

Alumina's Chairman Don Morley said today he wasn't clear on how the new tax would affect Alcoa of Australia.

Alumina declined 2.5 percent to A$1.545 at 10:42 a.m. Sydney time. The benchmark index fell 2.3 percent.

Pricing Mechanism

The Australian company owns 40 percent of the Alcoa World Alumina & Chemical venture and Alcoa the balance. The venture produces one quarter of the world's alumina, which is refined into aluminum.

Alumina wants a new pricing mechanism for alumina to reflect the growing spot market, Bevan said earlier this week. Traditional pricing linked to aluminum prices on the London Metal Exchange doesn't reflect the cost of producing alumina, he said.

United Co. Rusal, the world's largest aluminum producer, last month said it supported plans by BHP Billiton Ltd. to sell alumina at rates set by the market. BHP, the biggest mining company, is building on its success this year in forcing Asian steelmakers to ditch a 40-year-old system of setting iron ore prices in annual talks.


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