Graham Kerr suggests South32 to avoid heavy investments in alumina refinery as the commodity prices slump
Australian mining and metals company South32’s chief executive Graham Kerr reportedly says that it’s not the right time to commit large investments in alumina refineries expansion, as the return of Brazil’s Alunorte alumina refinery’s production creates an oversupply of the commodity which therefore leads to the price drop.
South32 owns stakes in alumina refineries in Brazil and at Worsley in Western Australia. Mr. Kerr says efforts to debottleneck and improve the consistency of those assets may add some incremental growth, but there would be no big spend.
''The reality of the moment with Alunorte ramping back up into production in Brazil, which is the world's largest refinery, the market is probably slightly long, and there has also been an additional five million tonnes of new capacity in China,'' he said.
Mr. Kerr thinks the oversupply of alumina may decrease during the Australian summer when Chinese refineries and heavy industries will go into their annual winter shutdowns.
Meanwhile, South32 expects to complete the divestment process for its South African coal assets by June 2020, having entered a sale agreement with Seriti Resources for the assets.
The miner reported that it faced a bigger-than-expected 25 per cent drop in annual profit as the US-China trade war weighed on aluminium prices. The underlying earnings for the 12 months to June 30 also fell to $US992 million from $US1.33 billion in the prior year. Net income could not get away with it either from the bleak consequences of the US-China trade war but dropped 71 per cent to $US389 million.
Alcoa and Norsk Hydro ASA, two of the world’s biggest aluminum producers, had warned last year that the trade war was clouding the outlook for the metal.
source: Alcircle
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