By Kishori Krishnan Exclusive To Aluminum Investing News
A closed aluminum mill in Canada has been bought out by the former owner of Koenig & Vits, Tim Martinez, according to a report in a French-language newspaper in Quebec’s Tuesday’s edition of Le Nouvelliste .
The purported $17 million deal has not just raised eyebrows but could veritably open a can of worms.
For the new owner is said to owe millions to local creditors, after the Koenig & Vits rolling mill was placed in receivership by a local court.
It was only in August that it was announced that the aluminum rolling mill on Mirro Drive, now in receivership after Manitowoc County Circuit Court, had removed Martinez from control.
In October, he was declared the winning bidder on the Quebec manufacturing plant that closed in November 2008.
Court documents filed in Manitowoc claimed Martinez owes millions to various creditors including $6.7 million to Community Bank & Trust in Sheboygan.
Manitowoc Public Utilities had sought $283,000 from Koenig & Vits and $90,000 from Martinez, personally.
Though none of this could be independently ascertained, so far, Martinez has not commented publicly about the Canadian acquisition.
One would think secrecy and silence would foster suspicion and resentment. Would the mill be rebuilt? Could it be used to pay off debtors?
Former employees, creditors and the general public are awaiting an explanation.
While Martinez remains mum, Alcoa has decided to go ahead and rebuild and enhance its 50,000-ton forging press in Cleveland, ending 15 months of uncertainty over the fate of the press.
Alcoa said it will spend more than $68 million to rebuild the press, in addition to $24 million previously approved.
The project will make Cleveland Works the world`s premier producer of large aluminum and titanium forgings for the defense, aerospace and industrial markets.
Earlier, Alcoa`s board had approved interim funding to allow engineering and early lead time commitments to proceed.
The project is also supported by a package of economic development incentives from the state of Ohio.
Earlier, Alcoa’s declaration of the first profit in five years, turned out to be no flash in the pan. The Aluminum Corp of China (Chalco) pulled the same stunt by generating a profit in the prior quarter.
Though its was 88 per cent below earnings from the same quarter a year earlier, the results were uplifting.
Though Kaiser Aluminum (Nasdaq: KALU) fell short of the expected per-share income of 29 cents last quarter, its operating income of 27 cents per share “is impressive” given the 31 per cent decline in year on year revenue.
Century Aluminum (Nasdaq: CENX), however, turned against the tide. The company would have posted a $15.1 million loss had it not been for an after-tax gain of $55.6 million on the termination of a contract.
Century earned $35.8 million in the same quarter a year earlier; revenues fell by 59 per cent on a year on year basis.
Market analysts look at it this way – Advantage Aluminium. Three of the Biggie four were out of the red. That was enough to uplift sentiments.
As if on cue, UC RUSAL, the world’s largest producer of aluminum and alumina, and China North Industries Corporation (NORINCO) signed a contract for aluminum delivery, at the start of the month.
Under the contract, the Russian company will supply 1.68 million tonnes of its aluminum to the Chinese company between 2010 and 2016. The metal will be shipped to NORINCO from UC RUSAL’s Siberian smelters.
China wants aluminum
The aluminum story has been developing in China, which is on pace to consume 1.8 million tons of aluminum in 2009, but it’s also on pace to more than meet that need by producing 13.2 million tons of it.
Chalco’s President Luo Jianchuan says the whole industry is still dealing with 20-30 per cent more capacity than it needs.
Bloomberg had earlier in the week reported that China’s aluminum production may gain 9 per cent to 14.5 million tonnes in 2010, as capacity idled because of the financial crisis restarted after prices rebounded.
Peter Deneen, an industry consultant with the New Jersey-based River Edge said, that “Chinese aluminum production has come roaring back and is likely to reach 13.3 million tonnes 2009.”
The China Nonferrous Metals Industry Association has said that output of 2008 was 13.2 million tonnes. Aluminum output in China, the world’s biggest consumer and producer, gained after the CNY 4 trillion government stimulus plan.
US trade complaint
Meanwhile, as President Obama prepares to make his first official trip to China, a new row has erupted.
The United States, Europe, and Mexico have asked the World Trade Organization (WTO) to arrange a dispute settlement panel to investigate Chinese restrictions on exports of certain industrial metals.
The WTO complaint claims that Chinese restrictions on exports such as bauxite and magnesium are driving up the prices of steel, aluminum, and chemical products.
Beijing applies an export duty of as high as 15 per cent on some of its materials.
Trade tensions between China and the US and the EU have grown. China also passed Canada to become the largest source of US imports in 2007.