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Thread: Alcoa plans to build $1 billion Aluminum smelter in Trinidad

  1. #1

    Alcoa plans to build $1 billion Aluminum smelter in Trinidad

    Alcoa Inc. on Monday said it plans to build a $1 billion aluminum smelter in Trinidad that will take advantage of the Caribbean island's natural gas reserves to produce the metal at a lower cost.

    Alcoa, the world's No. 1 aluminum producer, said it signed a memorandum of understanding with the government of the Republic of Trinidad and Tobago to build a smelter that will produce at least 250,000 tonnes of aluminum annually. The exact cost and size of the venture will be determined when the project is finalized.

    The primary benefit of building in Trinidad would be access to Trinidad and Tobago's natural gas fields, which would allow the Pittsburgh-based company to produce cheap electricity for the smelter. On average 25 percent of the cost of making aluminum is electricity, Alcoa said.

    The Trinidad project is a continuation of Alcoa's strategy to open more lower-cost facilities overseas, while reducing its focus on higher-cost domestic operations.

    In March, Alcoa Chairman Alain Belda said he expected the company to have more international than U.S. operations in two or three years. At that point, more than 60 percent of the company's operations were based domestically.

    The smelter in Trinidad would be only the second smelter the company has planned to build from scratch in the last 20 years. The other begins construction in Iceland in 2005.

    The company is also currently looking at smelter projects in China, Brunei, Bahrain, Brazil and Canada, company spokesman Kevin Lowery said.

    "Conceptually, it's a viable project," said BB&T Capital Markets analyst Lloyd O'Carroll, who owns some Alcoa shares and has a "buy" rating on the company.

    Depending on the power rate, the company could see significant savings when compared to U.S. smelting operations, O'Carroll said. It would also see some benefits from reduced freight rates from alumina refineries in nearby Jamaica and Suriname.

    The plant will be 60 percent owned by Alcoa and 40 percent held by Trinidad's government, the company said. Alcoa hopes to reach a definitive agreement with Trinidad by early 2005, at which time a schedule for production would be announced.

    The company, which will take a lead role in the management and operation of the smelter, will have a right to 60 percent of the metal produced at the smelter, as well as the option to buy some of the remaining 40 percent from Trinidad.

    Alcoa spokesman Kevin Lowery said the company hopes the smelter, which will employ about 575 people directly, will begin producing metal around 2007.

    Alcoa's shares rose 54 cents, or 1.8 percent, to $30.02 in afternoon New York Stock Exchange trade.

    Reuters 2004. All Rights Reserved.

  2. #2
    Mad Scorpion
    Well that should bring a few jobs to T&T

  3. #3
    Old School Member Panman06's Avatar Panman06 is offline
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    Jan 2000
    Originally posted by WICKED SCORPION
    Well that should bring a few jobs to T&T
    Thats what I'm sayin. I hope folks take advantage and study Chemical Engineering, so the execs dont ship ppl from abroad to fill the positions.

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