Wagerup expansion put on hold

Declining demand for aluminium has forced Alumina Ltd to reconsider plans to expand its Wagerup refinery in Western Australia.

Declining demand for aluminium has forced Alumina Ltd to reconsider plans to expand its Wagerup refinery in Western Australia.

Alumina’s chief financial officer Ken Dean told journalists it would be a year or two before the company could go back and make a firm decision on expanding Wagerup.

Alumina and partner Alcoa suspended the planned expansion of Wagerup in November as the global recession curbed demand for the lightweight metal.

Aluminum prices are near five- year lows as orders drop from automakers, builders and appliance manufacturers.

Alumina shares declined 1.4% to $1.41 in Sydney trading on the Australian stock exchange.

The AWAC venture, 60% owned by Alcoa and 40% controlled by Melbourne-based Alumina, produces one quarter of the world’s alumina, a powder refined from bauxite ore. It is then refined into aluminum to make aircraft and beverage cans.

The price of aluminum for delivery in three months, down 50% last year, stabilized recently with a 1.3% gain in the past month on the London Metal Exchange.

”What you have seen in the last month is some supply-side response and that is what is stabilizing the market and giving it a bit more optimism,” Dean said.

Alumina said yesterday it will write off about $40 million spent on potential growth projects that have been halted. The one-time charge came from engineering work completed for a proposed expansion of the Jamalco operations in Jamaica, Dean said. The operations are on hold until gas supplies can be secured.

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