07 May 2010 - Alumina Ltd says the bauxite mining and alumina refining market is looking more positive, and has maintained its earnings guidance.
Alumina's business is a 40 % interest in Alcoa World Alumina and Chemicals' (AWAC) global network of bauxite mines, eight alumina refineries, and two aluminium smelters.
"The market we operate in is still challenging, but the outlook is improving, and is now significantly above the lows of 2009," Alumina chief executive John Bevan told shareholders at the company's annual general meeting in Melbourne on Friday.
Mr. Bevan said Alumina had a strong balance sheet, and its investment in AWAC would benefit from an improving market and lower levels of future capital requirements.
"Underlying earnings for Alumina Ltd for 2010 remain in line with guidance provided in February this year," Mr. Bevan said, "Earnings will continue to be impacted by changes in aluminium price and exchange rates, as explained at the full year results."
Mr. Bevan said the Australian dollar and Brazilian real had been at high levels in 2010 compared with the historical average exchange rate. The outlook for AWAC in 2010 was improving.
Demand and pricing were stronger and AWAC expected to manufacture 15.8 million tonnes of alumina in 2010 compared to 13.5 million tonnes in 2009.
The pricing environment for alumina had improved, particularly in China, which now represented 35 % of the global market.
Mr. Bevan said that current market conditions raised the issue on how alumina should be priced in the longer term.
"The alumina price as a percentage linkage to the aluminium price has increased in recent years, but has not been adequate," Mr. Bevan said, "Changes to alumina pricing are necessary to restore operating margins to provide an adequate return to existing investment and to provide an incentive for new investment."
Alumina, used to make aluminium, is traditionally priced annually at between 10-17 % of the London Metal Exchange-traded price, which is currently around $US2, 070/tonne.
Alumina's business is a 40 % interest in Alcoa World Alumina and Chemicals' (AWAC) global network of bauxite mines, eight alumina refineries, and two aluminium smelters.
"The market we operate in is still challenging, but the outlook is improving, and is now significantly above the lows of 2009," Alumina chief executive John Bevan told shareholders at the company's annual general meeting in Melbourne on Friday.
Mr. Bevan said Alumina had a strong balance sheet, and its investment in AWAC would benefit from an improving market and lower levels of future capital requirements.
"Underlying earnings for Alumina Ltd for 2010 remain in line with guidance provided in February this year," Mr. Bevan said, "Earnings will continue to be impacted by changes in aluminium price and exchange rates, as explained at the full year results."
Mr. Bevan said the Australian dollar and Brazilian real had been at high levels in 2010 compared with the historical average exchange rate. The outlook for AWAC in 2010 was improving.
Demand and pricing were stronger and AWAC expected to manufacture 15.8 million tonnes of alumina in 2010 compared to 13.5 million tonnes in 2009.
The pricing environment for alumina had improved, particularly in China, which now represented 35 % of the global market.
Mr. Bevan said that current market conditions raised the issue on how alumina should be priced in the longer term.
"The alumina price as a percentage linkage to the aluminium price has increased in recent years, but has not been adequate," Mr. Bevan said, "Changes to alumina pricing are necessary to restore operating margins to provide an adequate return to existing investment and to provide an incentive for new investment."
Alumina, used to make aluminium, is traditionally priced annually at between 10-17 % of the London Metal Exchange-traded price, which is currently around $US2, 070/tonne.
