Aluminum Prices Jump to Record Highs

15 Jul 08

Shares in Alumina Ltd jumped almost eight per cent after aluminium prices rocketed to a record high as top producer China cut its output, lowering global supply.

The bauxite miner also cheered investors by disclosing that the fallout from the shutdown of its Varanus Island gas supplies wouldn't be as bad as initially expected.

Aluminium for three-month delivery rose to $US3,350 per tonne, or about five per cent, on the London Metal Exchange last night after China's top-20 smelters said they would cut output by five to 10 per cent to reduce power consumption.

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Alumina said last night after the market closed that the effect of the Varanus gas supply disruption on underlying earnings for June was $7 million net.

It had previously advised an expected effect of between $12 million to $17 million.

The impact for the third quarter was now expected to be $31 million net.

"This estimate is dependent on gas supplies being restored by mid August 2008 and excludes a future insurance reimbursement for the increased costs and lost revenues," it said.

Alumina shares rose 33 cents, or 7.8 per cent, to $4.56 after rising as high as $4.63.

The Varanus Island gas processing plant off the West Australian coast, near Karratha, is operated by US-based Apache Energy Ltd.

An explosion there in early June cut off almost 30 per cent of WA's domestic gas needs.

Apache last month said it expected the facility to resume full production by December, with partial gas output scheduled for mid-August.

Alumina's primary asset is a 40 per cent holding in Alcoa World Alumina and Chemicals, with the rest owned by US-based Alcoa.

Source: Australian Associated Press

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