Kandhamal : How Fourth Pillar dance with Sangha Parivar
Prof. Ashis Nandi wrote in Times of India (January, 2008) on Gujurat context, “the urban middle class has found in militant religious nationalism a new self-respect and a new virtual identity as a martial community. ….The middle class controls the media and education, which have become hate factories in recent times.” I saw approximately same in case of Orissa. Suddenly, after the killing of Laxmananda, leading media factories started spreading venom against Christian minority as if they were waiting for it. All started believing that Laxmananda was killed by ‘Christian fundamentalists’ or henchmen of them like Maoists who have taken money to kill him. What the role of media is, atleast to enquire into the incident and give a fact, did not happen in case of leading Oriya dallies. Had it been the communal hatred would not have spreaded so much.
The Samaj, the leading daily Oriya newspaper, having highest circulation in rural Orissa, wrote its editorial on 26th august, 2008 just after the killing of Laxmananda, “even if we be suspicious towards Maoists for the killing, some one must have used them in exchange of huge money. Those are spending lump some money in proselytizing tribal, it is natural that they could come under suspect.” Going one step ahead another leading Oriya news paper Dharitri wrote its editorial on 25th August “it is easy to blame Maoists for the killing of swamiji….. It is true that Graham Stain was killed for conversion where as Laxmananda was killed for checking conversion. It is sorry that people would forget Laxmananda’s contribution just after a bandh or a day.” Initially, just after the killing when some of government agencies were blaming Maoists (police DG and Home Secretary first blamed Maoists for the killing but later Naveen Patnaik, suppressing the fact, said some “miscreants” have done it) these media gave a saffron color of the incident and made the story that not the Maoists rather Christians have killed Laxmananda. This added more fuel to the fire and violence got spreaded into various parts of Orissa.
Whether any reader read the editorial or not but the correspondents and stringers of respective newspapers definitely read it to know what their respective editor wants on specific issue. Besides this, personal biasness of local media person matters a lot and they are not free from upper caste middle class biasness at least in Orissa. During this communal violence minimum constitutional rights are not respected by them. The local correspondents as a ‘martial community’ of religious nationalist forces went on reporting that Christian youths have killed Laxmananda. Later ‘Christian fundamentalists’ a category was floated ( Swamiji was in hit list of Christian fundamentalists and Maoists- Sambad, 26th August, 2008) to target the innocents. These media persons did not ask real existence of such a group.
The entire media turned a blind eye towards the plight of Christian victims. Rabindra Pradhan, whose paralysis brother was burnt alive near Chakapada ashram, could able to tell his story when he reached Bhubaneswar after a week of his brothers’ killing. He reached with his all other villagers after spending three nights in forest. Similarly, Puspanjali Panda whose husband was killed by the miscreants during the attack could able to say it after three weeks of his death. These were not the only incidents reported properly. Also Rajani Majhi, a Hindu girl who was burnt alive in Baragarh district was not reported by some of above newspapers when it was found that she was Hindu. Even infamous nun rape case got highlighted after a month of her reporting when an outside journalist came and reported it in national daily. It could have been brought by local media much earlier.
In no case the edit desk as well as local stringer showed any enthusiasm of reporting the grievous incident of communal attack and sufferings of Christian victims. They had a general reporting and were reporting how ‘communal tension spreaded into new areas’, ‘people burnt so many houses and vehicles out of anger’, ‘many people are leaving their houses and are coming to relief camps’, ‘Kandhamal violence in several districts’, ‘Kandhamal out of control’ etc as if media space was available to show the mardangi of the ‘Hindu miscreants’.
Often the state government announced sitting in Bhubaneswar “shoot-at-sight has been ordered”, “curfew has been imposed”, “law will takes its own course and no one will be spared” etc. But in reality these instructions at the village level were hardly carried out. The media did not say even after so much instructions and directions why the government agencies are failing. They did not report it that even if the violence is continuing then who are the perpetrators, how are they perpetrating, what are the slogans they are giving, how they are doing it when curfew and shoot-at-sight have been ordered etc. Rather, time and again media was trying to pinch the readers through out the violence , “violence due to killing of Laxmananda spreading”, “andolankari are moving towards villages” etc.
It never mentioned how “conversion” is taking place in name of “reconversion” in a terror state during those violence time in Kandhamal rather wrote “adivasis are coming back to Hindu religion” as if those Hindu miscreants were not doing any illegal work. The constitutional rights of a citizen was not respected.
In those tense hours several Hindu and tribal youths came in front to protect the Christian minority. Some of them were also attacked by the miscreants and some also succeeded in protecting the victim. Had it been covered by the media it would have checked the attack as well as blamed the role of miscreants involved.
Before the national minority commission comes the media was totally silent about the wretched condition in relief camps. We, as part of human rights organisations found during our visit, ‘people are forced to sit on the water logged ground. We found pigs and other animals roaming around the place where food was being cooked.’ We also warned through media that ‘there is every likelihood of infections breaking out any day’. But it was not properly covered by the media.
Where as the local media had never forgot to give front page coverage in reporting the version of Pravin Togadia, Ashok Singhal (President of VHP), Puri Hindu Maharaja and Puri Sankarachary attacking Christian minority. The media was covering it as if a mouth piece of Sangha Parivar. The local Oriya media were reporting each and every programe of RSS and Bajarang Dal condemning the killing of Laxmananda including the programe of “Laxmananda Sradhanjali committee”. But the fact finding visit report and condemnation of such attack by the secular forces were not given proper space (or a small space in a corner of any inside page) during those hours. National Human Rights commission chairman came after a month of initial attack and gave statement condemning the role of the government and its failure in checking the violence. This was covered by the media at the front page. So one can imagine well how these local media in those hours were affected by ‘militant religious nationalism’ and for a new ‘self-respect’ were bringing such story which could strengthen the hindutwa forces.
In conclusion, these prominent dailies kept on publishing reports and articles subscribing the views that (a) Maoists couldn’t have killed Laxmanananda; (b) Conversion to Christianity is at the root of Kandhamal problem; (c) Laxmananda was savior of tribal and he was involved with upliftment of tribal in truesense; (d) adivasis are Hindus and Christians are polluters in tribal land; (e) Panos (Christians) are outsiders and have taken away land from the tribal; (f) the Christians have fraudulently pocketed the benefits that are due to the tribal; (g) the tribal have become a minority in the district due to an overwhelming increase in Christian population; (g) the Christian leaders are out to give bad publicity to the State in Europe and America exaggerating the violence and even the allegation of rape of a nun is completely fabricated (g) Christian missionaries are taking lot of money from outside agencies and are engaged with proselytizing (h) ‘reconversion’ or ‘gharwapasi’ (how far it is ‘reconversion’ or conversion of Christian into Hindu religion with use of force) is essential. The media’s feeling that all Christians enemy. This was justifying the role of attackers more as if the innocent Christians in the district as well as in other parts were the master mind behind of the killing and should be punished severely.
(All these analysis are based on three Oriya news paper like Samaj, Sambad and Dharitri and their Bhubaneswar edition during August- September 2008.)
Thursday, September 17, 2009
Attack on Christians in Kandhamal
Attack on Christians in Kandhamal
Debaranjan
Swamy Laxmananda’s killing has raised many questions inside and outside Orissa. The flared-up communal violence after such killing is the basic ground for those questions. Suddenly, Christians, those comprise only 2.6% against 94% Hindus out of total population, became enemy of the majority. The poor state of economy, perennial caste conflict, regional imbalance, state repression, corporate globalization and forceful land acquisition were not the subjects of concerned rather conflict over religion - how far it is truly religion is- became the matter to be worried about for the time being in Orissa.
On 21st September, 2008 -after nearly a month of communal violence in Kandhamal- I went first time to the district and visited several affected areas where christians and their institutions were attacked. I was then part of a team comprised of various human rights organizations of different states like HRF and APCLC of Andhra Pradesh, PDF of Karnataka etc. I was interacting with the victims who took shelter in different relief camps of Tumudibandh, Baliguda, K. Nuagaon, and G.Udayagiri in Kandhamal. After that I visited the district once more and interacted with more sections of people. Then I met victims those who took shelter outside the district in Bhubaneswar, Cuttack and Brahmapur town.
Situation so volatile
Rabindra Pradhan, a dalit-christian of Rupagaon of Chakapada block was telling, “they came to our village with shouting slogans. We all went to the forest in fear but I left my younger brother Rasananda Pradhan who was a paralysis patient also. They burnt my houses and threw my brother alive into the fire and burnt him dead. I have seen them because my house was near to the forest. Most of them were of my own villagers.” Namita Digal, a dalit Christian woman of Pipudidei village of Tikabali block was telling “because of my pregnancy I could not run. All my family members ran into the forest. They were chasing us and I just hide myself inside a bush and saved myself. They burnt all our house belongings. Our own village people and nearby did this burning.” In fact, the tribals and dalits went to burn the houses of tribals and dalits of the same village or nearby in most of the cases in Kandhamal. Tribal-Christians were not spared from such attack by same tribals also. Galiyat Pradhan, a tribal- christians of Tiangia village near Raikia was telling “when they attacked our houses we ran away. I lost my son Sachinjit (8yrs) in the forest and got him after three days.”
Then can we say what happened in name of retaliation to killing of Swamy Laxmananda was just “spontaneous reaction” what often we heard from various sources? Or can we say it is just a conflict between Pano - dalit and kondh - tribals what government of Orissa has started saying? If it is really spontaneous then why no immediate violence did happen near Jaleshpeta ashram where Swamiji was killed, not much even in Kotagada block rather it happened more in northern part of the district, that is, between Baliguda to Chakapada block (Raikia, Tikabali, G. Udayagir, Paburia, K.Nuagaon, Barakhama, and Baliguda area) of the district? If it is just conflict between two communities like Dalit verses tribals then why tribals were attacked by tribals then?
Ranimati Digal, an anganwadi helper of Dolikia of Raikia; Sabita Prasad of Rudangia of G.Udayagiri and many others were telling “they were coming shouting slogans like ‘jay sri ram’, ‘jay bajarang bali’, ‘jay hindu rastra’, ‘kill christans’ etc. They had lathis, spade, petrol, diesel and few guns also. In this communal violence the northern part of the Kandhamal district was largely affected. The bigger relief camps were set up at Raikia, Tikabali, G. Udayagir, Paburia and Baliguda inside Kandhamal. At some places two relief camps were simultaneously running. Many Christian families left their houses when they were attacked or listened that they would be attacked and came to relief camps. Namita Digal was telling they spent two days and two nights before reaching the relief camps.
Manoj Digal, a dalit-christian of Raikia has an immediate answer of my question ‘why such violence happened more in northern part of the district’. He was telling “most of the Bajrang Dal/RSS chiefs of the district are belong to Baliguda, Raikia, G. Udayagir and Tikabali which happens to be the bigger trading center of the district.” After delimitation happened, Phulbani MP constituency has become general now. One trader, aspirant for the BJP ticket and was closer to Swamiji, organized such attack in some cases what he was telling me. But I was not convinced with his immediate reply. A group of traders happens to be the member of Sangha Parivar can not organize such attack on Christians with help of local tribal and dalits unless there is a similar voice in among them who went and destroyed the houses of same villagers.
Actually, the news of Swami Laxmananda’s killing by Maoists on 23rd August, 2008 at Jaleshpeta ashram near Kotagada (southern part of Kandhamal) spreaded like wildfire. In the same night just after the incident Naveen Patnaik, the chief minister said “some miscreants” have done this killing though he was aware of it that Maoists had done it. Earlier for every small incident in Orissa, Maoists were blamed by the government. Even when Jaswant Singh, IPS (then southern DIG of police) was killed by his own security men in 2007 initially Government of Orissa said “Maoists have done it’” and started combing operation in Rayagada district. But in this case knowing the fact that Maoists had left leaflet at the killing site and had faxed Press Release to various news offices claiming such killings, Government of Orissa did not accept it in public and media helped the government to spread. The way thing was organized against Christian minority it speaks about organized collusion of bureaucracy, police and media with ruling political bosses to do this attack.
This was immediately planned by the government and its partners including all its machineries, so that, the people’s anger could be directed towards minorities. Swamiji’s dead body was taken with much procession from Jaleshpeta ashram and traveled half of the district next day- 24th August- and covered the places like Baliguda, K Nuagaon, G. Udayagiri, Raikia, Paburia, Tikabali and Phulbani etc without any objection by the district administration and police in spite of section 144 in entire district and curfew in above towns were imposed since the day of killing. The district administration and police also permitted Pravin Togadia, self proclaimed international secretary of Viswa Hindu Parishad or VHP (VHP have not gone for election since its formation) to participate in the funeral procession. They were silent spectator of Togadia’s inflammatory speech against christian minority at the funeral site. All these callousness in part of district administration and police happened definitely in consent of the political bosses. (Naveen Patnaik, the chief minister also looks after the home ministry.) The communal assault on minority broke out from 25th August.
Swethu Nayak, a pastor of K.Nuagoan said “nearly 2000 people gathered at the K.Nuagoan market on 24th August noon time to receive Swamiji’s dead body. Suddenly news came that four Christian youths were caught by Raikia police with bible in their hands who have killed Swamiji. Then entire mob came towards our Christian pada and on that day burnt prayer halls. Then next day (on 25th August) again they came and burnt our houses”.
The armed police were telling to the victims, “we have guns but bullets are in hands of Naveen Patnaik”. The local victims of interior villages were praising before us the role of Rapid Action Forces (RAF) deployed in selected areas of the district but were condemning the role of state armed police. Dedhacharan Nayak, a dalit-christian of Baliguda town was telling “I phoned to the police station and immediately seven armed police men came to our pada. There was curfew in the town but 50-60 people came to attack us on 25th August. Only 10-12 women were with the mob who blocked the police and then police left the area”. Sajjit Nayak of Raikia town was telling a similar experience also when he approached the local police. He was telling how RAF came in rescue of them.
Just after two days of killing of the Swamiji - 25 August - the BJP gave a call of Orissa Bandh and communal assault on minority started in almost eight districts out of thirty districts of Orissa. It continued for some days in some parts of Subarnapur, Baragada, Koraput, Nabarangpur, Kalahandi, Gajapati, Bolangir and Rayagada districts but it continued up to end of November, 2008 in Kandhamal district only. The three months long communal violence took nearly 50 lives, destroyed 5000 houses and hundreds of religious institutions, made nearly 40,000 people displaced from their homes, out of this nearly 25000 people went to various relief camps and rest of the people went outside of the district. By the time I started visiting to the relief camps most of the landless Christian families had already left for Keral, Andhra Pradesh and Karnatak in search of work.
Motivation behind violence
It is said that conversion, fake certificates to dalit-christians in name of SCs and grabbing of tribal land by dalits are the reasons behind such attack. If it is true then why it happened on this occasion? Swami Laxmananda had never raised his voices against such issues except conversion. What is true is that in such areas of Baliguda, K Nuagaon, G. Udayagiri, Raikia, Paburia, Tikabali and Phulbani, Swami Laxmananda had largest followers. Sivaram Digal, a hindu-dalit of Katingia of G. Udayagiri was telling “before swamy Laxmananda came to our area we were poor. Under his guidance we improved a lot. I personally was a student of his Chakapada school and left after two years of study. But I was traveling with Swamiji and was telling our dalit and tribals brothers and sisters not to leave our religion. India is a hindu rastra and hindus only can stay here.” He was giving logic of recent violence, “christians killed our Swamiji and that became intolerable for most of the hindus (both dalits and tribals). So majority people came to the street and reacted”.
Swami Laxmananda came to Chakapada in northern part of Kandhamal district (then it was called as Phulbani) in 1969 and started an ashram and a school there. He was rather deputed by RSS to Phulbani with Raghunath Sethi, a Pracharak to check conversion and check missionary activities in the area. (1) From his beginning he was targeting tribals of the area. He was traveling each and every village of these areas and was participating in each and every function of the local community. Later he opened Jaleshpeta ashram in Kotagada area.
The tribal of the area were late entrants into hindutwa fold also like to Christianity. Bijay Pradhan, a tribal youth of Raikia who was earlier with RSS but left the organization was telling “RSS was organizing sakhas. I had helped to start some sakhas also. Swamiji with help of us were organizing satsang, yajna, and bhajan mandalis in tribal villages and was attracting tribals toward hindutwa. Tribals do say tribals when one asks about their caste and they say hindu when one asks them about their religion. Swamiji had taught this to them.” Ranimati Digal was alleging “ tribals in my village are now observing hindu festivals and have forgotten their own festivals. These tribals participated in looting of our houses”. On the other hand most of the tribal – christians to whom I met were telling “our fore-fathers were believing Dharanipenu ( tribal god) but now a days we have left our festivals and are doing X’mas or some of us are also observing hindu rituals like sankrati, ekadasi etc.”
Krushna Majhi, one of the tribal leaders of the area and who was also president of tribal forum ‘Kui Samaj’ said “untouchability was more in these communally affected northern part of Kandhamal areas. Dalits because of untouchability practices got attracted more towards christianity. Tribals of the same area also identified more with Hindu religion”. Not only Laxmananda but also Gayatri cult might have played a role behind such hinduisation. Gayatri cult, which is not critical about casteism rather speaks that a dalit and a tribal can be a Brahmin and perform yajna (but to leave drinking liquor and eating beef) is equally acceptable in the area. I saw few tribal devotees of gayatri who have been observing it for some decades.
Krushna Majhi also was telling “tribals on southern part of the district like Kotagada, Tumudibandh, Daringbadi and Brahmanigaon area were more taking beef as their age old practices and they did not find difficulty with Christianity. But tribal of the northern area are identified more with Hindu religion because beef eating was not a practice in those areas.” This is why communal assault on Christians was less in southern part than in the northern side of the district.
But why so much hatred of hindu community towards christians? Salunga Pradhan, the previous MLA of G Udayagiri when revealed this fact to me that Swamiji was provoking the audiences in dharma satsang such as, “Who can throw a stone on a church raise your hand”, “Who can burn a bible lift up your hand” and was propagating the idea that ‘only if one is part of VHP, then could be safe’, I was surprised. I crosschecked his allegation on Swamiji at every where and I got the same answer. I was surprised because it had never come in the media. Swamiji then started provoking ‘hindu-majority’ followers in Kandhamal to attack the minority. In Kandhamal and more particularly in those areas where he was frequently visiting, hatred against churches and christian minorities were growing more which came into culmination in August (2008) attack. I could understand the anger of Swamiji who feels powerful because he himself belongs to the brahmanic-hindu majority (he himself is a dalit from a dhobi or washer man community) but I could not understand why local tribal identified more with such powerful majority and came in hate against his own villagers unless and until there is a conflicting relationship between both the identification.
Manoj Digal of Raikia was giving a brief history of such attack in past on christians in the district. He was telling “whenever Swamiji was conducting a program in Kandhamal, there was bound to be some random stone pelting on churches around that area.” Such attacks on Christian religious institutions in Kandhamal district happened earlier like at Raikia (1986), Baliguda (1986), Daringbadi (1986), Simonbadi (1987), Baliguda (1989), G.Udayagiri (1999) where either church or Christian religious leader or both were attacked.(2) The hatred had been finely brewed by the Hindu right wing for almost two decades now. The death of the Swamiji only acted as the immediate spark in an already volatile Kandhamal and left many questions unanswered.
Kandhamal, why a soft target
Kandhamal comes under eastern hill range of India. Its demographic picture speaks, more than half of the population are tribals (52%) who are mainly of kondh tribe. Besides them, dalits are of 16% of the total population and among them Pano community are the majority. Rest of the population are trading community and upper caste people who migrated to the districts for trading and other purposes from the coastal area in recent past. Few of them are retired government officials who settled in Kandhamal.
By and large, dalits and tribals in Kandhamal stay together in interior villages of the district where as other castes like General caste and trading community (few Other Backward Castes also) in comparatively small number live with dalits and tribals in road side villages. Most upper caste trading people prefer to stay in small village towns like Raikia, G Udayagir, Baliguda, and Tikabali - local trading centers. Turmeric cultivation and sal-leaf collection are the prominent agriculture as well as forest economy of the district apart from rice and vegetables. The Tribal Development Cooperative Corporations (TDCC) in Baliguda, Tikabali towns for forest produces; Regional Marketing Centers (RMC) opened in Tikabali, Raikia, G. Udayagiri for agricultural products like turmeric to help local tribals became defunct and traders of the area took these businesses into their hands. That developed a nexus of hoarding, distress sale by traders in connivance with government officials.
Kandhamal is one of the most backward districts in terms of infrastructure, electricity and civic amenities. Human Development Report 2004, Government of Orissa speaks Kandhamal district ranks as 29 under Human Development Index (HDI), 30 under Health Index Rank and 23 under Education Index Rank. Orissa has thirty districts now. The intervention of christian missionaries for one hundred and fifty years and entry of hindutwa for fifty years ‘for upliftment of tribals and dalits’ did not do much change in the development atlas of the district. Rather traders, politicians and government officials are ruling the rust. The upper caste, upper and middle class hindu and their economic, political and cultural leaders, in fact with the active support of the state and administrative machinery and political parties are stimulating a cultural climate which encourages a value system which strengthens the prejudices against the lower classes and non-hindus. (3). They made non-hindus and lower class community into victims of their own value system. Swamiji’s main supporters in the areas were these local traders and government officials who belong to the upper caste and upper middle class. Their ‘value system’ of hindu-brahmanic ideology is to hide their won corrupt practices and to propagate religious hatredness (which we have been seeing for centuries together) against the religious minority. The role of these people behind this communal attack who have their link with higher echelons both in among political as well as in administrative and media circle, is definitely suspicious.
My assumption in Kandhamal would have been wrong had I not been enquiring about the last year’s (2007) incident. Communal riot happened during X’mas days (December) in 2007 when rumor spreaded that Swamiji was attacked by minority christians at Dasingbabdi near Bahmanigaon in Kandhamal. It was a pre-planned effort of Hindutwa forces to disturb the festival. Then, group classes happened at two places. Upper caste local traders who happened to be the supporter of Swamiji went and burnt Christian houses shouting slogans like “kill the Christians; destroy the churches” at Bahmanigaon. They burnt 30 houses at Bahmanigaon and in retaliation also Hindu traders’ houses were burnt (who did this burning is a matter of confusion now even today). Also in Barakhama near Baliguda, group clashes happened in the same reaction and nearly 60 houses were burnt. In both these incidents police came into picture and went on firing. Due to police firing four people died. At several places in Kandhamal churches were attacked but it was not much sever as like in August, 2008.
Maoists’ factor
It is learnt that the CPI (Maoists) group were not active in Kandhamal earlier to this incident but they were trying to expand their areas. But why they targeted Swamiji? Rajendra Bastaray of Tumudibandh was telling “there was no discussion about role of hindutwa forces by the Maoists in the district prior to the killing”. It must not have been Maoists apprehension that entire Christian minority people would be attacked for this killing. But it is also true that in reality they also failed to check such attack. It speaks their negligible presence in the district. But surprisingly, these ‘ultra Marxists’ like Maoists who till date were recognizing only ‘proletariat identity’ for ‘workers’ socialism’, now have come in support of ‘tribal identity’. (“Tribal are not hindus and not Christians. They have their own cultures which should be protected.”- Maoist’s Oriya magazine ‘inquilab’ speaks). Are they really interested for protection of ‘tribal identity’ for their ‘proletariat socialism’? Are they not killing tribal in name of police informer rather leaving it to the entire community to decide? One’s, respect to tribal identity and ignoring the role of tribal community, can not go together. Are not they using such for their own expansion?
In the mean time Maoists have killed another local VHP person Dhanu Pradhan at Daringbadi in December, 2008. He had a role behind such attack on christians what they are telling. But can such killing bring peace and harmony in the district? Can it water down the religious hatredness growing between both communities? Will it not force the paramilitary forces to be stationed permanently or to create another Salwa Judum like situation for the protection of these traders cum hindutwa forces? If this happens then there is no doubt that those tribal- sympathizers of Swamiji- would be the members of Salwa Judum and this would bring serious problem to the area.
I know the future of the district is very much uncertain but its present is not so much hopeless. Dandapani Mallick, a tribal leader of Damikia near Baliguda moved around four villages with village committee members and stopped the entry of hindutwa forces inside the villages. By this way he was able to save some christian families. He himself did not belong to Christians nor Hindus rather claims himself as tribal. Several tribal youths of Kotagada, Brahmanigaon and Tumudibandh area spontaneously came forward and moved around their own villages and stopped violence. They are the real hope of solving the tragedy.
References
1. RSS’s Tryst with Politics by Pralay Kanungo
2. Faith Under Fire by JPDC Bhubaneswar (2008)
3. Communal riots in post – independence India by Asghar Ali Engineer
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Debaranjan
Swamy Laxmananda’s killing has raised many questions inside and outside Orissa. The flared-up communal violence after such killing is the basic ground for those questions. Suddenly, Christians, those comprise only 2.6% against 94% Hindus out of total population, became enemy of the majority. The poor state of economy, perennial caste conflict, regional imbalance, state repression, corporate globalization and forceful land acquisition were not the subjects of concerned rather conflict over religion - how far it is truly religion is- became the matter to be worried about for the time being in Orissa.
On 21st September, 2008 -after nearly a month of communal violence in Kandhamal- I went first time to the district and visited several affected areas where christians and their institutions were attacked. I was then part of a team comprised of various human rights organizations of different states like HRF and APCLC of Andhra Pradesh, PDF of Karnataka etc. I was interacting with the victims who took shelter in different relief camps of Tumudibandh, Baliguda, K. Nuagaon, and G.Udayagiri in Kandhamal. After that I visited the district once more and interacted with more sections of people. Then I met victims those who took shelter outside the district in Bhubaneswar, Cuttack and Brahmapur town.
Situation so volatile
Rabindra Pradhan, a dalit-christian of Rupagaon of Chakapada block was telling, “they came to our village with shouting slogans. We all went to the forest in fear but I left my younger brother Rasananda Pradhan who was a paralysis patient also. They burnt my houses and threw my brother alive into the fire and burnt him dead. I have seen them because my house was near to the forest. Most of them were of my own villagers.” Namita Digal, a dalit Christian woman of Pipudidei village of Tikabali block was telling “because of my pregnancy I could not run. All my family members ran into the forest. They were chasing us and I just hide myself inside a bush and saved myself. They burnt all our house belongings. Our own village people and nearby did this burning.” In fact, the tribals and dalits went to burn the houses of tribals and dalits of the same village or nearby in most of the cases in Kandhamal. Tribal-Christians were not spared from such attack by same tribals also. Galiyat Pradhan, a tribal- christians of Tiangia village near Raikia was telling “when they attacked our houses we ran away. I lost my son Sachinjit (8yrs) in the forest and got him after three days.”
Then can we say what happened in name of retaliation to killing of Swamy Laxmananda was just “spontaneous reaction” what often we heard from various sources? Or can we say it is just a conflict between Pano - dalit and kondh - tribals what government of Orissa has started saying? If it is really spontaneous then why no immediate violence did happen near Jaleshpeta ashram where Swamiji was killed, not much even in Kotagada block rather it happened more in northern part of the district, that is, between Baliguda to Chakapada block (Raikia, Tikabali, G. Udayagir, Paburia, K.Nuagaon, Barakhama, and Baliguda area) of the district? If it is just conflict between two communities like Dalit verses tribals then why tribals were attacked by tribals then?
Ranimati Digal, an anganwadi helper of Dolikia of Raikia; Sabita Prasad of Rudangia of G.Udayagiri and many others were telling “they were coming shouting slogans like ‘jay sri ram’, ‘jay bajarang bali’, ‘jay hindu rastra’, ‘kill christans’ etc. They had lathis, spade, petrol, diesel and few guns also. In this communal violence the northern part of the Kandhamal district was largely affected. The bigger relief camps were set up at Raikia, Tikabali, G. Udayagir, Paburia and Baliguda inside Kandhamal. At some places two relief camps were simultaneously running. Many Christian families left their houses when they were attacked or listened that they would be attacked and came to relief camps. Namita Digal was telling they spent two days and two nights before reaching the relief camps.
Manoj Digal, a dalit-christian of Raikia has an immediate answer of my question ‘why such violence happened more in northern part of the district’. He was telling “most of the Bajrang Dal/RSS chiefs of the district are belong to Baliguda, Raikia, G. Udayagir and Tikabali which happens to be the bigger trading center of the district.” After delimitation happened, Phulbani MP constituency has become general now. One trader, aspirant for the BJP ticket and was closer to Swamiji, organized such attack in some cases what he was telling me. But I was not convinced with his immediate reply. A group of traders happens to be the member of Sangha Parivar can not organize such attack on Christians with help of local tribal and dalits unless there is a similar voice in among them who went and destroyed the houses of same villagers.
Actually, the news of Swami Laxmananda’s killing by Maoists on 23rd August, 2008 at Jaleshpeta ashram near Kotagada (southern part of Kandhamal) spreaded like wildfire. In the same night just after the incident Naveen Patnaik, the chief minister said “some miscreants” have done this killing though he was aware of it that Maoists had done it. Earlier for every small incident in Orissa, Maoists were blamed by the government. Even when Jaswant Singh, IPS (then southern DIG of police) was killed by his own security men in 2007 initially Government of Orissa said “Maoists have done it’” and started combing operation in Rayagada district. But in this case knowing the fact that Maoists had left leaflet at the killing site and had faxed Press Release to various news offices claiming such killings, Government of Orissa did not accept it in public and media helped the government to spread. The way thing was organized against Christian minority it speaks about organized collusion of bureaucracy, police and media with ruling political bosses to do this attack.
This was immediately planned by the government and its partners including all its machineries, so that, the people’s anger could be directed towards minorities. Swamiji’s dead body was taken with much procession from Jaleshpeta ashram and traveled half of the district next day- 24th August- and covered the places like Baliguda, K Nuagaon, G. Udayagiri, Raikia, Paburia, Tikabali and Phulbani etc without any objection by the district administration and police in spite of section 144 in entire district and curfew in above towns were imposed since the day of killing. The district administration and police also permitted Pravin Togadia, self proclaimed international secretary of Viswa Hindu Parishad or VHP (VHP have not gone for election since its formation) to participate in the funeral procession. They were silent spectator of Togadia’s inflammatory speech against christian minority at the funeral site. All these callousness in part of district administration and police happened definitely in consent of the political bosses. (Naveen Patnaik, the chief minister also looks after the home ministry.) The communal assault on minority broke out from 25th August.
Swethu Nayak, a pastor of K.Nuagoan said “nearly 2000 people gathered at the K.Nuagoan market on 24th August noon time to receive Swamiji’s dead body. Suddenly news came that four Christian youths were caught by Raikia police with bible in their hands who have killed Swamiji. Then entire mob came towards our Christian pada and on that day burnt prayer halls. Then next day (on 25th August) again they came and burnt our houses”.
The armed police were telling to the victims, “we have guns but bullets are in hands of Naveen Patnaik”. The local victims of interior villages were praising before us the role of Rapid Action Forces (RAF) deployed in selected areas of the district but were condemning the role of state armed police. Dedhacharan Nayak, a dalit-christian of Baliguda town was telling “I phoned to the police station and immediately seven armed police men came to our pada. There was curfew in the town but 50-60 people came to attack us on 25th August. Only 10-12 women were with the mob who blocked the police and then police left the area”. Sajjit Nayak of Raikia town was telling a similar experience also when he approached the local police. He was telling how RAF came in rescue of them.
Just after two days of killing of the Swamiji - 25 August - the BJP gave a call of Orissa Bandh and communal assault on minority started in almost eight districts out of thirty districts of Orissa. It continued for some days in some parts of Subarnapur, Baragada, Koraput, Nabarangpur, Kalahandi, Gajapati, Bolangir and Rayagada districts but it continued up to end of November, 2008 in Kandhamal district only. The three months long communal violence took nearly 50 lives, destroyed 5000 houses and hundreds of religious institutions, made nearly 40,000 people displaced from their homes, out of this nearly 25000 people went to various relief camps and rest of the people went outside of the district. By the time I started visiting to the relief camps most of the landless Christian families had already left for Keral, Andhra Pradesh and Karnatak in search of work.
Motivation behind violence
It is said that conversion, fake certificates to dalit-christians in name of SCs and grabbing of tribal land by dalits are the reasons behind such attack. If it is true then why it happened on this occasion? Swami Laxmananda had never raised his voices against such issues except conversion. What is true is that in such areas of Baliguda, K Nuagaon, G. Udayagiri, Raikia, Paburia, Tikabali and Phulbani, Swami Laxmananda had largest followers. Sivaram Digal, a hindu-dalit of Katingia of G. Udayagiri was telling “before swamy Laxmananda came to our area we were poor. Under his guidance we improved a lot. I personally was a student of his Chakapada school and left after two years of study. But I was traveling with Swamiji and was telling our dalit and tribals brothers and sisters not to leave our religion. India is a hindu rastra and hindus only can stay here.” He was giving logic of recent violence, “christians killed our Swamiji and that became intolerable for most of the hindus (both dalits and tribals). So majority people came to the street and reacted”.
Swami Laxmananda came to Chakapada in northern part of Kandhamal district (then it was called as Phulbani) in 1969 and started an ashram and a school there. He was rather deputed by RSS to Phulbani with Raghunath Sethi, a Pracharak to check conversion and check missionary activities in the area. (1) From his beginning he was targeting tribals of the area. He was traveling each and every village of these areas and was participating in each and every function of the local community. Later he opened Jaleshpeta ashram in Kotagada area.
The tribal of the area were late entrants into hindutwa fold also like to Christianity. Bijay Pradhan, a tribal youth of Raikia who was earlier with RSS but left the organization was telling “RSS was organizing sakhas. I had helped to start some sakhas also. Swamiji with help of us were organizing satsang, yajna, and bhajan mandalis in tribal villages and was attracting tribals toward hindutwa. Tribals do say tribals when one asks about their caste and they say hindu when one asks them about their religion. Swamiji had taught this to them.” Ranimati Digal was alleging “ tribals in my village are now observing hindu festivals and have forgotten their own festivals. These tribals participated in looting of our houses”. On the other hand most of the tribal – christians to whom I met were telling “our fore-fathers were believing Dharanipenu ( tribal god) but now a days we have left our festivals and are doing X’mas or some of us are also observing hindu rituals like sankrati, ekadasi etc.”
Krushna Majhi, one of the tribal leaders of the area and who was also president of tribal forum ‘Kui Samaj’ said “untouchability was more in these communally affected northern part of Kandhamal areas. Dalits because of untouchability practices got attracted more towards christianity. Tribals of the same area also identified more with Hindu religion”. Not only Laxmananda but also Gayatri cult might have played a role behind such hinduisation. Gayatri cult, which is not critical about casteism rather speaks that a dalit and a tribal can be a Brahmin and perform yajna (but to leave drinking liquor and eating beef) is equally acceptable in the area. I saw few tribal devotees of gayatri who have been observing it for some decades.
Krushna Majhi also was telling “tribals on southern part of the district like Kotagada, Tumudibandh, Daringbadi and Brahmanigaon area were more taking beef as their age old practices and they did not find difficulty with Christianity. But tribal of the northern area are identified more with Hindu religion because beef eating was not a practice in those areas.” This is why communal assault on Christians was less in southern part than in the northern side of the district.
But why so much hatred of hindu community towards christians? Salunga Pradhan, the previous MLA of G Udayagiri when revealed this fact to me that Swamiji was provoking the audiences in dharma satsang such as, “Who can throw a stone on a church raise your hand”, “Who can burn a bible lift up your hand” and was propagating the idea that ‘only if one is part of VHP, then could be safe’, I was surprised. I crosschecked his allegation on Swamiji at every where and I got the same answer. I was surprised because it had never come in the media. Swamiji then started provoking ‘hindu-majority’ followers in Kandhamal to attack the minority. In Kandhamal and more particularly in those areas where he was frequently visiting, hatred against churches and christian minorities were growing more which came into culmination in August (2008) attack. I could understand the anger of Swamiji who feels powerful because he himself belongs to the brahmanic-hindu majority (he himself is a dalit from a dhobi or washer man community) but I could not understand why local tribal identified more with such powerful majority and came in hate against his own villagers unless and until there is a conflicting relationship between both the identification.
Manoj Digal of Raikia was giving a brief history of such attack in past on christians in the district. He was telling “whenever Swamiji was conducting a program in Kandhamal, there was bound to be some random stone pelting on churches around that area.” Such attacks on Christian religious institutions in Kandhamal district happened earlier like at Raikia (1986), Baliguda (1986), Daringbadi (1986), Simonbadi (1987), Baliguda (1989), G.Udayagiri (1999) where either church or Christian religious leader or both were attacked.(2) The hatred had been finely brewed by the Hindu right wing for almost two decades now. The death of the Swamiji only acted as the immediate spark in an already volatile Kandhamal and left many questions unanswered.
Kandhamal, why a soft target
Kandhamal comes under eastern hill range of India. Its demographic picture speaks, more than half of the population are tribals (52%) who are mainly of kondh tribe. Besides them, dalits are of 16% of the total population and among them Pano community are the majority. Rest of the population are trading community and upper caste people who migrated to the districts for trading and other purposes from the coastal area in recent past. Few of them are retired government officials who settled in Kandhamal.
By and large, dalits and tribals in Kandhamal stay together in interior villages of the district where as other castes like General caste and trading community (few Other Backward Castes also) in comparatively small number live with dalits and tribals in road side villages. Most upper caste trading people prefer to stay in small village towns like Raikia, G Udayagir, Baliguda, and Tikabali - local trading centers. Turmeric cultivation and sal-leaf collection are the prominent agriculture as well as forest economy of the district apart from rice and vegetables. The Tribal Development Cooperative Corporations (TDCC) in Baliguda, Tikabali towns for forest produces; Regional Marketing Centers (RMC) opened in Tikabali, Raikia, G. Udayagiri for agricultural products like turmeric to help local tribals became defunct and traders of the area took these businesses into their hands. That developed a nexus of hoarding, distress sale by traders in connivance with government officials.
Kandhamal is one of the most backward districts in terms of infrastructure, electricity and civic amenities. Human Development Report 2004, Government of Orissa speaks Kandhamal district ranks as 29 under Human Development Index (HDI), 30 under Health Index Rank and 23 under Education Index Rank. Orissa has thirty districts now. The intervention of christian missionaries for one hundred and fifty years and entry of hindutwa for fifty years ‘for upliftment of tribals and dalits’ did not do much change in the development atlas of the district. Rather traders, politicians and government officials are ruling the rust. The upper caste, upper and middle class hindu and their economic, political and cultural leaders, in fact with the active support of the state and administrative machinery and political parties are stimulating a cultural climate which encourages a value system which strengthens the prejudices against the lower classes and non-hindus. (3). They made non-hindus and lower class community into victims of their own value system. Swamiji’s main supporters in the areas were these local traders and government officials who belong to the upper caste and upper middle class. Their ‘value system’ of hindu-brahmanic ideology is to hide their won corrupt practices and to propagate religious hatredness (which we have been seeing for centuries together) against the religious minority. The role of these people behind this communal attack who have their link with higher echelons both in among political as well as in administrative and media circle, is definitely suspicious.
My assumption in Kandhamal would have been wrong had I not been enquiring about the last year’s (2007) incident. Communal riot happened during X’mas days (December) in 2007 when rumor spreaded that Swamiji was attacked by minority christians at Dasingbabdi near Bahmanigaon in Kandhamal. It was a pre-planned effort of Hindutwa forces to disturb the festival. Then, group classes happened at two places. Upper caste local traders who happened to be the supporter of Swamiji went and burnt Christian houses shouting slogans like “kill the Christians; destroy the churches” at Bahmanigaon. They burnt 30 houses at Bahmanigaon and in retaliation also Hindu traders’ houses were burnt (who did this burning is a matter of confusion now even today). Also in Barakhama near Baliguda, group clashes happened in the same reaction and nearly 60 houses were burnt. In both these incidents police came into picture and went on firing. Due to police firing four people died. At several places in Kandhamal churches were attacked but it was not much sever as like in August, 2008.
Maoists’ factor
It is learnt that the CPI (Maoists) group were not active in Kandhamal earlier to this incident but they were trying to expand their areas. But why they targeted Swamiji? Rajendra Bastaray of Tumudibandh was telling “there was no discussion about role of hindutwa forces by the Maoists in the district prior to the killing”. It must not have been Maoists apprehension that entire Christian minority people would be attacked for this killing. But it is also true that in reality they also failed to check such attack. It speaks their negligible presence in the district. But surprisingly, these ‘ultra Marxists’ like Maoists who till date were recognizing only ‘proletariat identity’ for ‘workers’ socialism’, now have come in support of ‘tribal identity’. (“Tribal are not hindus and not Christians. They have their own cultures which should be protected.”- Maoist’s Oriya magazine ‘inquilab’ speaks). Are they really interested for protection of ‘tribal identity’ for their ‘proletariat socialism’? Are they not killing tribal in name of police informer rather leaving it to the entire community to decide? One’s, respect to tribal identity and ignoring the role of tribal community, can not go together. Are not they using such for their own expansion?
In the mean time Maoists have killed another local VHP person Dhanu Pradhan at Daringbadi in December, 2008. He had a role behind such attack on christians what they are telling. But can such killing bring peace and harmony in the district? Can it water down the religious hatredness growing between both communities? Will it not force the paramilitary forces to be stationed permanently or to create another Salwa Judum like situation for the protection of these traders cum hindutwa forces? If this happens then there is no doubt that those tribal- sympathizers of Swamiji- would be the members of Salwa Judum and this would bring serious problem to the area.
I know the future of the district is very much uncertain but its present is not so much hopeless. Dandapani Mallick, a tribal leader of Damikia near Baliguda moved around four villages with village committee members and stopped the entry of hindutwa forces inside the villages. By this way he was able to save some christian families. He himself did not belong to Christians nor Hindus rather claims himself as tribal. Several tribal youths of Kotagada, Brahmanigaon and Tumudibandh area spontaneously came forward and moved around their own villages and stopped violence. They are the real hope of solving the tragedy.
References
1. RSS’s Tryst with Politics by Pralay Kanungo
2. Faith Under Fire by JPDC Bhubaneswar (2008)
3. Communal riots in post – independence India by Asghar Ali Engineer
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Behind the Shining: Aluminum's Dark Side
Behind the Shining: Aluminum's Dark Side
An IPS/SEEN/TNI report
2001
I. Table of contents
II. Executive Summary
III. Aluminum production infrastructure
IV. Corporate control
V. Multilateral and bilateral financial institutions' support
VI. Human rights
1. Impact of bauxite mining on indigenous peoples
Sidebar: The impending death of Mulanje Mountain
2. Aluminum wars (Tajikistan, Sierra Leone, etc.)
3. Workers rights and dirty industry migration
VII. Environmental health
1. Cancer in beluga whales
2. Impact of emissions on workers and communities
a. Coal tar fumes and PAH
b. Fluoride
c. Red Mud
d. Other emissions
3. Global warming
a. Perfluorocarbons
b. Carbon dioxide
c. The industrial lobby
VIII. Energy
1. Hydro
a. Great dams
b. The Pacific Northwest power war
2. Coal
3. Gas
4. Geothermal
5. Nuclear
Appendices
I. World bauxite production tables
II. World alumina refinery tables
III. World aluminum smelter tables
IV. Maps and photos
II. Executive summary
Aluminum holds a pretty positive image in the global marketplace. The
metal's shiny exterior glimmers like an antidote to its heavyweight
competitor, steel, or its lightweight, cheap-feeling counterpart, plastic. It holds this image despite the earth- and bone-shattering reality of its production.
From the devastation of some of the planet's most wondrous features, like Mulanje Mountain in Malawi and the beluga whales of Canada's St. Lawrence River, to the uncommon death rates of its employees and neighbors, to the global climactic consequences of its emissions, the aluminum industry churns a dark existence behind its shining exterior.
This report examines the global structure and social and environmental
impacts of an industry that deserves great scrutiny. Corporations engage in the mining of bauxite, the refining of alumina, and the smelting of aluminum with a reckless abandon that rivals anything done by more-infamous chemical and fossil fuel industrial forces. The industry's impacts span the spectrum of human and environmental abuse.
Corporate control
A handful of companies -- Alcoa, Alcan, Billiton and Norsk Hydro --
orchestrate most of the industry's global activity. Transnational
corporations participate in more than 60 percent of the world's bauxite
production. Alcoa alone controls more than one-third of the world's alumina production. These companies hold large stakes in each crucial step of the production cycle. Alcoa and Alcan absorbed leading competitors in the year 2000, awakening historic fears of monopolism.
Corruption and struggles (fiscal and physical) run rampant in the other
concentrated sphere of production, the countries carved from the former
Soviet Union.
Dirty Industry Migration
As with many dirty industries, production is increasingly concentrated in the global South. With energy and labor prices escalating in the
industrialized West, new capacity almost always is proposed in the
developing world.
Bilateral and multilateral development banks are helping to fuel this
industrial flight. The World Bank and national lenders have financed, or plan to back, aluminum industry infrastructure privatization or
construction projects in Armenia, Azerbaijan, Brazil, Cameroon, China,
Egypt, Ghana, Guinea, Guyana, Indonesia, India, Kazakhstan, Malawi,
Mozambique, Oman, Russia, Tajikistan, and Turkmenistan. These institutions' $4.4 billion in financial aid to developing countries mainly benefits western transnational corporations.
One multilateral government arm, the European Bank for Reconstruction and Development, even financed the export of the dirtiest type of aluminum technology -- a Soderberg smelter -- from an aging smelter in Slovakia to a new one in Iran.
Resettlement
The extraction of natural resources, aluminum's fodder, begins the
industry's ecological and human toll. While mining bauxite, lignite, and coal, and damming rivers, aluminum corporations have erased villages where tens of thousands of people once lived. Long-time residents of countless communities have been forced to move and make way for aluminum giants' new strip mines, dams and water courses.
Most bauxite mining occurs in tropical regions peopled by indigenous
communities, from northern Australia to South America to west Africa.
In the eastern Indian state of Orissa, indigenous communiities have been trying to stop the construction of the world's largest new bauxite mine and alumina refinery complex. In December 2000, police allegedly shot and killed three men who lived in a village where people refused to move out for Norsk Hydro and Alcan's Utkal project.
In Brazil, the construction of the Tucurui dam displaced more than 25,000 people. More than half of the power generated by Tucurui goes to aluminum smelters in northern Brazil. The new reservoir impacted an estimated 100,000 people who drank and fished the river and farmed along the riverbed. After the reservoir was filled in 1984, a prolific outbreak of mosquitoes forced farm families close to the new reservoir to leave their homes. The reservoir also helped to concentrate mercury discharges from upstream gold mining operations in fish tissues.
In Surinam, 6,000 people were forced to move from their ancestral
communities in the tropical rainforest to make way for an Alcoa/Billiton dam and smelter. A proposed new dam for a smelter in Sarawak, Malaysia, could force the resettlement of 10,000 indigenous people.
Dr. Kua Kia Soong, head of a non-governmental coalition in Sarawak,
wondered, "Why do we want toxic and energy-hungry industries such as
aluminum smelters? Aluminum smelting is one industry that the developed
countries want to dump on suckers like us because it is environmentally
toxic and it consumes voracious amounts of energy."
Power Hunger
Smelters aggregate around sources of cheap energy, because 45% of the cost of aluminum smelting is electricity. These factories have concentrated around the world's vastest sources of energy: massive power-producing dams, rich seams of coal, gas fields in the Middle East, and geothermal fields in Iceland.
The industry's hunger for power produces engineering marvels, tragic
disparities and ecological devastation. In places like Surinam, powerlines en route to smelters tower over new communities inhabited by indigenous people forced to move from homelands flooded by new hydroelectric dams. In small countries like Tajikistan, Bahrain, and Ghana, smelters consume a third or more of the national power supply.
Some aluminum companies have threatened to close their smelters in regions where energy prices are skyrocketing, like the Pacific Northwest. Alcan and Alcoa idled smelters in Oregon and British Columbia as prices soared in 2000 and 2001. Where aluminum producers own electricity, they have cut aluminum production to sell power to the grid when prices are high.
"More jobs will be eliminated... if the price of power is right," predicted a Canadian Auto Workers local union in December 2000.
Cheap Labor
Labor is the industry's second most costly expense. Many of the biggest
companies simultaneously increase profits and lock out restless workers. Transnationals replace lost production from shuttered smelters in the West by maximizing production at cheaper factories in places like Mozambique, where Billiton pays most workers less than 30 cents per hour. Shortly before the Mozambique smelter began production, Billiton announced plans to lay off 5,000 workers from its older and better organized smelters in South Africa.
Aluminum industry laborers, wherever they work, face severe on-the-job
health risks. Smelter potrooms are a particularly hazardous workspace. At an Alcan smelter in British Columbia, Canada, over 20 workers have been disabled by or died from on-site exposures to cancerous emissions.
Since the late 1970s, scientists have correlated elevated bladder cancer rates in smelter potroom workers. In 1989, Alcoa told an Australia newspaper that it "emphatically rejects" any such risk for smelter workers. In 1999, Alcoa finally sent warnings to thousands of its workers worldwide that "a small increase in cancer could be expected at lower levels of exposure than had previously been expected."
Ecological Toll
The industry also exacts steep tolls from surrounding communities and
ecosystems. Fluoride emissions from the Nalco smelter in India plague local villagers with brittle bones, tooth and gum diseases, and lumps of dead skin. Their cattle, more prone to fluoride contamination, commonly suffer from bone deformities and rising death rates. In one village within a kilometer of the plant, the local herd of cattle dropped from 3,000 to 100 head in a ten year period. Similar symptoms of fluorosis are apparent in villages around the world's fourth largest smelter, in Tursunzade, Tajikistan.
A Quebec, Canada, region that hosts four Alcan smelters has the highest
birth defect rate in the country. It leads the province in deaths caused by malignant tumors. Biologists have connected emissions from these smelters with cancers in beluga whales downstream in the Saint Lawrence Estuary.
Global Warming
Aluminum smelters' emissions have a truly global impact. A recent study
found that the industry emits about 1 percent of global emissions of
man-made greenhouse gases. The industry is a significant contributor to
global climate change for two reasons: (1) it consumes enormous amounts of energy, much of it fossil fuels such as coal, that release carbon dioxide when burned and (2) smelters produce small quantities of extremely potent greenhouse gases.
The aluminum production cycle generates an estimated 12 tons of carbon
dioxide per ton aluminum produced. Total carbon dioxide emissions are
predicted to rise from about 2 billion tons in 1985 to about 3 billion tons by the year 2003.
Roughly one-third of aluminum's electricity is generated by burning coal. In addition to producing carbon dioxide emissions from captive fossil fuel-fired power plants, the industry further contributes to global warming through its heavy usage of hydroelectric power. In tropical countries, where smelters have congregated around great dams, massive amounts of vegetation decay in flooded forest. Carbon dioxide and methane emissions from the new tropical reservoirs may contribute as much greenhouse gas as would a fossil fuel plant that would produce the same amount of energy, according to a recent World Commission on Dams study. Dams fuel 57% of global aluminum production.
Smelter potrooms produce the industry's other main contribution to climate change: perfluorocarbons (PFCs). Smelters are responsible for 90 percent of all tetrafluromethane, and 65 percent of all hexafluoroethane emissions worldwide. These PFCs have global warming potentials that are 6,500 to 9,200 times higher than carbon dioxide.
These and other realities did not deter the fiscal optimism of Alcoa
chairman Paul O'Neill in 1999. "I don't see environmental issues as a
negative for aluminum or Alcoa," he said. "As long as legislatures and
governing bodies don't do stupid things, we'll be fine." Mr. O'Neill is now the U.S. Secretary of Treasury under President George W. Bush.
III. Aluminum production infrastructure
The aluminum industry begins with bauxite mining. About 85 percent of all the bauxite mined worldwide is refined into alumina. More than 90 percent of refined alumina is then consumed in aluminum smelters. (Patricia Plunkert, "Bauxite and Alumina-1999," U.S. Geological Survey, 2000)
Bauxite mining is the only step in aluminum production that can not shift: the subsequent steps, refining bauxite into alumina, and turning alumina into aluminum, can and do bound across the world in search of the cheapest costs.
After the bauxite is mined at a handful of mines, aluminum oxide --
commonly called alumina - [is added] at a few dozen plants. Then, production moves on to scores of aluminum smelters, where an electrolytic process ("reduction") removes oxygen from the alumina. The resultant molten primary aluminum is then cast and shipped to fabricating plants. Generally, one ton of aluminum is produced from two tons of alumina, which is produced from five tons of bauxite.
Reduction demands enormous amounts of electricity. And so, these smelters are congregated around some of the world's vastest sources of energy: massive power-producing dams, rich seams of coal, and the gas fields of the Arabian Peninsula (see Energy chapter).
A. Bauxite
Proven and probable bauxite reserves stood at 25 billion tons at the end of 1995, according to the U.S. Bureau of Mines. The actual amount of reserves may be as high as 75 billion tons. Most of the bauxite reserves are in tropical regions, led by South America (33%), Africa (27%), Asia (17%), and Oceania (13%). According to the U.S. Geological Survey, "the sheer magnitude of these reserves is sufficient to ensure a readily accessible supply for the future." ("Bauxite and alumina," U.S. Geological Survey, Sept. 3, 1996; also, Plunkert, 2000)
Bauxite production grew by 13 percent (112 to 127 million tons) from 1994 to 1999. Australia is the largest producer (38%), followed by Guinea (12%). Brazil's share of production grew from 7% in 1994 to 10% in 1999, overtaking Jamaica (9%) for third in global production. Production is also growing rapidly in China and India. (See tables for further details) (European Association of Mining Industries; U.S. Geological Survey)
Most bauxite that is mined is of metallurgical grade, in the trihydrate
form. Non-metallurgical, monohydrate, grade bauxite is used in
refractories. Bauxite is also consumed in the production of abrasives,
cement, aluminum sulfates for water purification, sizing agents for paper manufacture, and other applications. (Africa Resources Corp.)
Although bauxite is almost always the raw material used to produce alumina, other materials are technically-feasible sources. "Clay, anorthosite, alunite, coal wastes, and oil shales, offer additional potential alumina sources. Although it would require new plants using new technology, alumina from these nonbauxitic materials could satisfy the demand for primary metal, refractories," according to the U.S. Geological Survey. (USGS, Sept. 3, 1996)
Labor (34%) and energy (21%) account for more than half of the cost of
bauxite mining. (Africa Resources Corp.)
Alumina and aluminum producers dominate bauxite mining. In 1993,
transnational aluminum companies participated in more than 62% of the
world's bauxite production.
Many bauxite mines are owned by partnerships of transnational aluminum
corporations and the host government. Guinea, Brazil, Venezuela, India,
Indonesia, Turkey, and Ghana hold bauxite mine ownership stakes. (Africa Resources Corp.) Host governments took many of these stakes in a wave of nationalizations in the 1970s. Seven producing countries -- Australia, Guinea, Guyana, Jamaica, Sierra Leone, and Yugoslavia -- banded together to form the International Bauxite Association in 1974. However, Australia's unilateral efforts prevented the IBA from becoming an OPEC-like cartel. (Samir Amin, "Mining in Africa today - Strategies and prospects," The United Nations University, 1988)
Transnational corporate investments in these and new bauxite mines surged in subsequent years.
The Alcoa World Alumina and Chemicals group (AWAC) produces and sells
bauxite and alumina. This joint venture between Alcoa (60%) and Western
Mining Corp. (WMC, 40%) produces more alumina than any other company in the world.
Australia
Australia leads the world in bauxite production, producing about 40 percent of the global total. The main mines, all of which are open pits, are located in Queensland (Weipa), Northern Territory (Gove) and Western Australia (Worsley). Unexploited but vast bauxite deposits are also located in the Mitchell Plateau and Cape Bougainville regions of Western Australia. ("Australian Resources and Deposits," Australian Bureau of Resource Sciences, 2000)
- Weipa (Comalco/Rio Tinto)
The world's largest bauxite mine is located in far north Queensland, in the village of Weipa. Comalco mines about 10 million tons of bauxite a year from this open pit. It has proven ore reserves of 296 million tons, probable ore reserves of 109 million tons. According to Comalco, another 3.8 billion tons of bauxite may be available. Most of the mined bauxite goes to the company's refinery in Gladstone. One-fifth of the bauxite goes to a refinery in Italy. (Rio Tinto website, "Comalco," at
http://aboriginalrelations.riotinto.com/nde/sites/comalco/)
- Worseley (Billiton)
Billiton gained control over the bauxite and alumina complex in Worsley, Western Australia, in late 2000. Benefiting from a U.S. Dept. of Justice-ordered sale of Alcoa/Reynolds alumina production capacity,
Billiton added Reynolds' 56% controlling stake to its 30% existing share in Worsley. The $1.2 billion acquisition gave Billiton a mine with over 50 years of bauxite reserves. Mining has expanded to accommodate an expansion at the accompanying alumina refinery.(Commerzbank Securities, "Billiton company report," August 30, 2000)
- Gove (Alcan/Billiton)
Algroup (now a part of the Alcan conglomerate) holds a 70 percent share
that controls the Gove bauxite and alumina complex in the Northern
Territory of Australia. Billiton owns a minority stake, which it purchased from CSR Ltd. in March 2000. AMP Ltd. owns a small share of the complex.
The alumina refinery is being expanded from 1.8 million tons of annual
capacity to 2 million tons. Two million tons of bauxite are exported rather than refined in Gove. (Billiton, "Billiton and CSR sign heads of agreement on Gove Aluminum Ltd.," press release, March 16, 2000)
-Ely (Alcan)
Alcan and Comalco plan to develop a bauxite mine in Queensland. In 1998, the two companies agreed to exploit the Ely mine owned by Alcan in Cape York, in conjunction with Comalco's adjacent operations, beginning in 2000. (Alcan 10-K, FY1999)
Brazil
In Brazil, the world's biggest aluminum companies are partners in the main producing company, Mineracao Rio do Norte. MRN's main operation is the Trombetas mine in the Amazon.
MRN is owned by CVRD/Aluvale of Brazil, 40%, Alcoa/Reynolds, 18.2%,
Billiton. 14.8%, Alcan, 12%, Companhia Brasileira de Aluminio, 10%, and
Norsk Hydro 5%. The Brazilian National Development Bank is planning to sell its 20% stake in CVRD (Companhia Vale do Rio Doce). MRN is planning to expand bauxite production from 11 million to 14.5 million tons per year. (Mining Annual Review, March 2000; Alcoa 10-K, FY1999; Alcan 10-K, FY1999)
Alcoa also owns an interest in an undeveloped bauxite reserve in Brazil
(Reynolds 10-K, FY1999)
Ghana
Alcan owns 80% of Ghana Bauxite Co., which shipped 400,000 tons of bauxite to Alcan's Burntisland (Scotland) and Jonquiere (Quebec) alumina refineries in 1999. (Alcan 10-K, FY1999)
Greece
Greece is the largest bauxite producer in Europe, and the 12th largest in the world, accounting for 2% of global production. The country holds 150 million tons of reserves and mined 2.45 million tons in 1996. Most is mined by Pechiney subsidiary, Aluminum of Greece. Most bauxite is consumed by Aluminum of Greece's alumina refinery. The company, which also operates an aluminum smelter, is the largest heavy industrial firm in Greece. ("Bauxite," Athens News Agency, Feb. 1998)
Guinea
Guinea, which trails only Australia in bauxite production, holds an
estimated 20 billion tons of bauxite, or about one-third of the world's
reserves. Mining takes place through three companies: Compagnie des
Bauxites de Guinee (CBG), Friguia, and Societe des Bauxites de Kindia
(SBK). ("Guinea: Africa Review," Africa Review World of Information, March 1998)
- CGB
CGB mined an estimated 12.15 million tons of bauxite in 1999. It is a joint venture between the government (49%) and the Halco consortium (51%). CGB holds a 10,000 square mile concession to develop and mine bauxite in northwestern Guinea, through the year 2038.
Halco investors include Alcoa (which now manages CGB), Alcan, Pechiney,
Comalco, Reynolds, and VAW. Open pit mines include Boke, Sangaredi,
Bidikoum, and Silidarou. Materials flow from the pits to the massive Kamsar crushing and drying plant. CGB started mining bauxite in 1973. (Leslie Wright and Morcire Sylla, "Guinea," Mining Annual Review, March 2000; Reynolds 10-K, FY1999)
Bauxite from CGB supplies Alcoa's refineries in Pt. Comfort, Texas, and San Ciprian, Spain, Alcan's refinery in Jonquiere, Quebec, the Sherwin, Texas, refinery formerly owned by Reynolds, and a refinery in Stadt, Germany, owned by VAW. (Alcoa 10-K, FY1999; Alcan 10-K, FY1999)
- Friguia
Friguia, the second largest producer (2.3 million tons of bauxite mined in 1999), has operated as a 49% government/51% private joint venture named Frialco. Pechiney, Noranda, Alcan, and Hydro have been investors in Frialco. The company name is changing to Alumina Co. of Guinea (ACG).
Friguia owns the only alumina refinery in West Africa. (Mining Annual
Review, March 2000; "Bauxite boost for Guinea," Mining Journal, Feb. 25, 2000 )
In 1999, Reynolds reportedly attempted to purchase a 100% stake in Friguia. According to African Mining Monitor, "the sale would be in the form of a lease of management scheme, enabling the investor to manage and modernize the assets without getting involved with the social concerns of the place."
Reynolds reportedly wanted to secure Friguia bauxite for the Alscon smelter in Nigeria and Volta smelter in Ghana, in which Reynolds holds 10% stakes. ("Reynolds Metals negotiating with Guinean government," African Mining Monitor, April 6, 1999)
In July 1999, Reynolds and the government reached a memorandum of
understanding in which Reynolds would manage the Friguia refinery. (Mining Annual Review, March 2000)
Friguia of Guinea also operates a bauxite mine in neighboring
Guinea-Bissau. It is planning to double production at this mine to 710,000 tons per year, at a cost of $70 million. ("MBendi Profile: Friguia," at http://www.mbendi.com/proj/p0d6.htm)
- SBK
The third largest Guinean producer, SBK, mined about 1.5 million tons of bauxite in 1999. It is studying granting control to Africa Mining Services (a project of Eltin-Ausdrill) and Shell. (Mining Annual Review, March 2000)
In 2000, SBK formed a partnership with Siberian Aluminium to develop the Bolondugu bauxite mine. Siberian Aluminum (Russwia) holds a large stake in the Nikolayev Alumina Plant in Ukraine, which is a long-time importer of Guinean bauxite. ("Siberian Aluminum to mine bauxite in Guinea," Interfax Russian News, March 22, 2000; "Siberian Aluminium to develop Guinean bauxite deposit," African Mining Monitor, April 3, 2000)
Guyana
Guyana's government is planning to privatize its two bauxite companies,
Berbice Mining Enterprises (Bermine) and Linden Mining Enterprise
(Linmine). The privatization would open 60% majority stakes to help fund capital improvements at both facilities. (Plunkert, 2000)
Reynolds, now owned by Alcoa, holds a 50% stake in the Bermine operation, and purchased 2 million tons of bauxite from the enterprise in 2000. (Reynolds 10-K, FY1999)
Hungary
A new bauxite mine is planned in Bakoyoszlop, Hungary. The open pit mine, operated by Bakony Bauxite Mines, could produce more than 650,000 tons per year from reserves of 4.4 million tons. (Plunkert, 2000)
India
India, particularly the state of Orissa, is poised to become one of the
world's leading producers of bauxite and alumina. The largest pending
project, the Utkal partnership, is discussed in depth in the human rights chapter of this report. Utkal is a $1 billion venture between Norsk Hydro (45%), Alcan (35%) and Alcan's subsidiary, Indal (20%), in the state of Orissa.
Indal, the Alcan subsidiary, also owns and operates bauxite mines in
Chandgad and Lohardaga. (Alcan 10K, FY1999)
Nalco plans to double its bauxite mining to 4.8 million tons per year.
(Mining Annual Review, March 2000)
Jamaica
Transnational corporations have long dug bauxite out of this Caribbean
country.
In Jan. 2000, Kaiser, Hydro, Alcoa and the Jamaican government agreed to share costs and production at the Alpart and Clarendon operations.
Kaiser and Hydro held 65 and 35 percent shares in Alumina Partners of
Jamaica (Alpart), which mined 3.6 million tpy from the Discovery
Bay/Manchester Plateau region. Alcoa and the government were in a 50/50
joint venture, called Jamalco, that runs a 2 million tpy mine in Clarendon Parish. (Plunkert, 2000; Alcoa 10-K, FY1999)
A 1999 explosion at Kaiser's alumina refinery in Louisiana led Alpart to severely curtail production at Alpart's Discovery Bay operations. About 3.3 million tons of bauxite per year from this mine were destined for the Louisiana refinery.
In early 2000, Alcoa contracted the Jamaican government to produce 400,000 tons of bauxite per year for its Point Comfort, Texas, refinery. ("Govt. secures bauxite deal," Caribbean Update, Feb. 1, 2000)
Russia
Severalboksitruda is the largest bauxite producer in Russia, accounting for 70 percent of the country's production. It started digging an open pit in Olkhovskoye in 1999 and announced plans to start production from a new deep mine, in Novo-Kalinskaya, in 2003. Bauxite mined by this company is mainly sold to the Bogoslovsk aluminum works. (Plunkert, 2000)
Suriname
Alcoa mines bauxite in Suriname through its subsidiary, Suriname Aluminum Company (Suralco). Alcoa also owns a 24% share in a separate mining operation, in Moengo, controlled by Billiton. According to Alcoa's 1999 annual report, "Suralco expects to deplete the current mine reserves at both operations in the period 2005-2010." (Alcoa 10-K, FY1999)
Alcoa first mined bauxite in Suriname in 1917. Billiton began mining there in 1942. Through the 1960s, the country ranked as the world's largest bauxite producer. Alcoa (through its Suralco subsidiary) and Billiton have focused on reserves in eastern Suriname.
Now that the two older mines are being depleted, the companies are looking to the west, where they have launched a joint venture to mine the Bakhuis deposit. This deposit is one of the world's largest. ("Maroon Community Petitions Suriname Government about the Operations of a US-owned Bauxite Mining Company," Forest Peoples Programme, September 17, 1998)
United States
Almost all of the bauxite consumed in the United States is mined outside the country. Three companies operated small surface bauxite mines in Alabama and Georgia in 1995, almost all of which was consumed in the production of nonmetallurgical products. Alumina refiners in the United States import about 10 million tons of bauxite annually. The major supplying countries from 1991 to 1994 were Guinea (34%), Jamaica (30%), Brazil (14%), and Guyana (13%). ("Bauxite and Alumina," U.S. Geological Survey, Mineral Commodity Summaries, January 1996)
Vietnam
According to Mining Annual Review (March 2000), in 1999 Pechiney held talks with the Vietnam government about conducting a "prefeasibility study on a bauxite and a one million ton per year alumina joint venture."
Venezuela
The Venezuelan Corporation of Guayana (CVG)'s Bauxilum subsidiary mines
bauxite (4 to 5 million tons per year). (Venezuela Commercial Office,
presentation to Expo 2000 - Hannover at www.venezuelaexpo2000.com/oficina/english/expo_opo_mineria_actores_guayana_en.html)
B. Alumina
Using the Bayer process, trihydrate bauxite is heated and aluminum oxide, a white powdery substance, is formed. The refining process extracts one ton of alumina from about 2.23 tons of bauxite. (Africa Resources Corp.)
Since the 1970s, many alumina refineries have moved from the Western world to the bauxite mines. "This is especially true for the major bauxite production centers of Australia, Brazil, Venezuela and India. In each case, bauxite mines have been developed by one or more of the major integrated aluminum producers. They have found it more economical to convert the bauxite to alumina on-site (or close by) rather than incurring high transport costs," according to Africa Resources Corp.
The global capacity of smelter grade alumina refineries was 49 million
metric tons in 2000. (USA v. Alcoa and Reynolds, complaint filed in U.S. District Court, Washington, D.C., May 3, 2000)
Four countries -- Australia (33%), the U.S., China, and Jamaica -- produced more than 55 percent of the world's alumina in 1999. (Plunkert, 2000)
As with bauxite, aluminum transnational corporations produce most of the
world's alumina. Aluminum producers hold ownership stakes in alumina
refineries that consume about 85 percent of mined metallurgical grade
bauxite. The rest of the bauxite (about 5 million tons) is sold to
refineries in the former Soviet Union or third party companies who pass the material along to Western producers. Kaiser, Pechiney, the new Middle East producers, and refineries in the former Soviet Union are more dependent on bauxite purchases than companies like Alcoa, Alcan, and Billiton. (Africa Resources Corp.)
Before Alcoa and Reynolds merged, Alcoa and Reynolds owned or controlled
14.5 million and 4.4 million tons of this capacity, respectively, or a
combined 38 percent of the global market. (USA v. Alcoa and Reynolds)
Alcoa, the world's leading producer of alumina, owns alumina refineries in Kwinana, Pinjarra and Wagerup, Western Australia; Pocos de Caldas, Brazil; San Ciprian, Spain; St. Croix, Virgin Islands; and Pt. Comfort, Texas.
Alcoa also manages the operations of three alumina refinery joint ventures in which it has an ownership interest: Paranam, Suriname (55 percent Alcoa ownership); Sao Luis, Brazil (54 percent Alcoa ownership); and Clarendon, Jamaica (50 percent Alcoa ownership).
All but the Brazil operations are operated under Alcoa's AWAC partnership with WMC. About 47% of AWAC's production in 1999 was consumed by Alcoa; the rest was sold to third parties. (USA v. Alcoa and Reynolds; Alcoa 10-K FY1999)
Prior to the merger, Reynolds owned an alumina refinery in Corpus Christi, Texas; 56 percent and control of the management of a joint venture alumina refinery in Worsley, Western Australia; 50 percent of a joint venture alumina refinery in Stade, Germany; and managed and was entitled to 10 percent of the production of the Friguia, Guinea alumina refinery. (USA v. Alcoa and Reynolds)
The U.S. Department of Justice has noted the potential for the corporate
giants to fix prices. In its anti-trust complaint that forced Alcoa to sell off some of its alumina refineries last year, it said the market for smelter grade alumina "has certain characteristics conducive to
anticompetitive coordination." The DOJ said the sales were needed to
"ensure that competition will continue." (USA v. Alcoa and Reynolds,
complaint filed in U.S. District Court, Washington, D.C., May 3, 2000; USA v. Alcoa and Reynolds, proposed final judgment, U.S. District Court,
Washington, D.C., May 3, 2000)
Australia
Australia produces more than double the amount of alumina made in the USA, which ranks second. Unlike the USA, most of Australia's refineries consume locally-mined bauxite. The country hosts the world's largest group of refineries (Alcoa's three Western Australia refineries), the largest recent refinery expansion project (Billiton's Worsely refinery), and the largest individual refinery (Comalco/Rio Tinto's Gladstone refinery).
- Alcoa (Kwinana, Pinjarra, and Wagerup)
AWAC's three mining-refinery operations in Western Australia -- Kwinana
(south of Perth) and Pinjarra and Wagerup (in the southwest) -- form the
world's largest source of bauxite and alumina. At the end of 1999, these
operations had a combined alumina production capacity of 7.3 million tons per year. (Alcoa 10-K, FY1999)
The Alcoa/Western Mining operators plan a $550 million project to expand
Wagerup's capacity from 2.2 million to 3.3 million tons.. At Pinjarra, a
retrofitting project is expected to boost production by 165,000 tpy in
2001. (Plunkert, 2000; Bob Regan, "Alcoa mulling 50% capacity expansion at Wagerup refinery," American Metal Market, Jan. 26, 2001; Alcoa 10-K, FY1999)
- Billiton (Worsely)
In October 2000, Billiton took control of the Reynolds alumina refinery in Worsely, Australia, which the U.S. Dept. of Justice ordered sold in the Alcoa/Reynolds merger. It bought Alcoa's 56 percent stake in Worsley for $1.49 billion in cash. ("Billiton scoops giant Australian alumina miner," Financial Post, Aug. 30, 2000)
Billiton now owns an 86% stake in the refinery and nearby bauxite mine in Western Australia. Japan-based Kobe (10%) and Nissho Iwai Corp. (4%) own the balance of the operation.
In the world's largest recent alumina refinery expansion, capacity at
Worsley expanded from 1.9 to 3.1 million tons in mid-2000. According to
Mining Annual Review (March 2000), "the project has been plagued by labor problems and is well over budget.") Another 300,000 tons of capacity may be added. (Commerzbank Securities, "Billiton company report," August 30, 2000)
- Comalco (Gladstone)
In Gladstone, Queensland, Rio Tinto subsidiary Comalco owns and operates
the world's largest alumina refinery. This 3.5 million ton refinery
processes bauxite that Comalco mines at Weipa in northern Queensland. Alcan holds a 21.4% stake in the Gladstone alumina plant. Its share of production is shipped to the Alcan smelter in Kitimat, British Columbia. (Alcan 10-K, FY1999; Rio Tinto website)
Throughout 1999, Comalco deliberated on the sitting of a new Aus$1.4
billion refinery in either Gladstone in Australia, or Sarawak in Malaysia. [See Human Rights chapter] In April 2000, the company decided to focus its feasibility study on adding capacity in Gladstone. ("Comalco Chooses Gladstone as Site for Alumina Refinery Feasibility Study," company press release, April 3, 2000)
Brazil
Alumina production has increased steadily in Brazil, from 2.1 million tons in 1995 to 3.5 million tons in 1999. Further expansion is planned.
- Alumar (Sao Luis)
Alcoa Aluminio (of which Alcoa Inc. owns 59%), manages and owns 35% of the Alumar cost- and production-sharing refining and smelting venture near Sao Luis, in the northeastern state of Maranhao. Other investors in the Alumar venture include Billiton (36%), Alcoa/WMC subsidiary Abalco (19%), and Alcan (10%).
The Alumar refinery's capacity stood a 1.25 million metric tons, most of which was consumed in its smelter. In addition, Alcoa Aluminio operates a 275,000 tpy refinery in Pocos de Caldas, which also supplies the Alumar smelter. (Alcoa 10-K, FY1999)
- Aluvale
In 1999, Hydro of Norway signed a memorandum of understanding to take a 25% interest in Brazilian alumina producer Vale do Rio Doce Aluminio (Aluvale). Aluvale is a subsidiary of Companhia Vale do Rio Doce (CVRD). The deal would guarantee the delivery of 378,000 tons per year of alumina to Hydro. The plant in the state of Para' is slated for an 800,000 metric ton expansion to 2.3 million tons in 2002. (Plunkert, 2000; Stephen Johnston, "Aluminium," Mining Annual Review, March 2000)
Canada
Alcan owns and operates a 1.2 million ton alumina refinery in Jonquiere,
Quebec. It imports bauxite mainly from Brazil and Guinea. Alumina produced in Jonquiere mainly supplies Alcan's several smelters in Quebec. (Alcan 10-K, FY1999)
China
China was the world's third largest producer of alumina in 1999, up from
fifth place in 1995. Production grew by 57 percent, from 2.2 to 3.8 million tons, in five years. Most alumina produced in China is consumed
domestically. (Plunkert, 2000)
Alumina refining is continuing to grow. Pogguo Aluminium Co. is planning to boost capacity at its Guangxi refinery from 350,000 to 950,000 tons per year (tpy). French transnational Pechiney is working with the Guizhou Aluimium Works on an upgrade at a 400,000 tpy refinery that would boost production by 100,000 tpy. The Shandong Aluminum Plant is expanding production at its refinery from 620,000 to 770,000 tpy. (Plunkert, 2000)
Guinea
The Friguia alumina plant has a capacity of about 640,000 tons per year. Friguia is 49% government/51% private joint venture, with Pechiney, Noranda, Alcan, and Hydro as private investors. (Mining Journal, Jan. 2, 1998)
India
Alcan's subsidiary, Indal, owns and operates alumina refineries in Belgaum (Karnataka) and Muri (Bihar) with a combined capacity of 390,000 tons. It is planning to expand capacities at Belgaum to 365,000 tons and at Muri to 101,000 tons. (Alcan 10-K, FY1999; Mining Annual Review March 2000)
State-controlled National Aluminium Company (Nalco) plans to expand its
alumina refining capacity in India to 1.58 million tons. (Mining Annual
Review, March 2000)
Iran
Czech company Technoiomport has developed a mine and 100,000 ton per year alumina refinery around bauxite reserves in Jajarm, northern Iran. The government also wants investment in a proposed two million ton per year alumina refinery on Qeshm Island, which would serve domestic smelters, Alba and other Gulf region producers. ("Iran," Mining Annual Review, June 1992)
Ireland
Alcan owned a 1.4 million ton per year alumina refinery in Aughinish, which it sold to Glencore AG in 1999. (Plunkert, 2000; Alcan 10-K, FY1999)
Jamaica
Alcoa and Alcan drive alumina refining in Jamaica, the world's fourth
largest alumina refiner.
Alcoa and the Jamaican government are 50/50 partners in an alumina refinery in Clarendon Parish. Alcoa manages the 1 million tpy refinery. (Alcoa 10-K, FY1999)
Alcan owns (93% share; government 7%) and operates alumina refineries in
Kirkwine and Ewarton. Alcan's Kirkvine and Ewarton plants had a combined
capacity of 1.175 million tons in 1999. Most of this alumina supplies
Alcan's smelters in Canada and the U.S. (Alcan 10-K, FY1999)
Russia
The three largest alumina refineries in Russia are located in Bogoslovsky (1.05 million tons capacity), in the Ural Mountains (950,000 tons), and Achinsk (900,000).
The Achinsk refinery is in dire straits. In 1999 according to Mining Annual Review (March 2000), "the struggle got physical at financially-troubled Achinsk." In September 1999, workers forced a court-appointed manager to leave. "Police and the governor came but the workers refused to allow them into the plant." (Mining Annual Review, March 2000)
Spain
Alcoa runs a 1.11 million ton refinery in San Ciprian. It planned to boost production there by 220,000 tons per year by March 2001. (Plunkert, 2000; Alcoa 10-K, FY1999)
Suriname
The U.S. State Department calls alumina exports "the backbone of Suriname's economy." Alcoa began producing alumina there in 1941. "The preeminence of bauxite and Alcoa's continued presence in Suriname is a key element in the U.S.-Suriname economic relationship," reads a 1998 State Dept. briefing. (Bureau of Inter-American Affairs, "Background Notes: Suriname," U.S. Department of State, March 1998)
Alcoa and Billiton share operations at the Suralco alumina refinery in
Paranam, on the Atlantic coast. The 1.7 million ton Paranam refinery
processes all of the bauxite mined at the two company's mining operations. Alcoa owns 55% of the Paranam refinery. Billiton owns the other 45%. (Alcoa 10-K, FY1999)
Ukraine
In March 2000, the Ukrainian government privatized 30 percent of Nikolaev, a 1.05 million ton per year alumina refinery, against the wishes of the country's parliament. A company linked to Sibirsky of Russia won the 30% share at auction. (Mining Annual Review, March 2000)
United States
The USA holds more alumina refining capacity than any country outside
Australia. Almost all of the bauxite consumed at these refineries is
imported.
In 1995, the U.S. had an annual alumina refining capacity of 5.6 million
tons. Four Bayer refineries were in operation at the end of the year.
Operational capacity grew to 6.2 million tons in 1998, then fell to 5.1
million tons after Kaiser's Gramercy alumina refinery suffered a
catastrophic explosion in 1999.
At the end of 1999, operational alumina plants in the U.S. included:
Alcoa's 2.3 million ton refinery in Point Comfort, Texas, and 600,000 ton refinery in St. Croix, Virgin Islands; Ormet's 600,000 ton refinery in Burnside, Louisiana; and Reynolds' 1.6 million ton plant in Sherwin, Texas. Smelters in North America consume almost all of these plants' production.
On Dec. 31, 2000, an investment group purchased the Sherwin, Texas,
refinery -- the ninth largest in the world -- from Alcoa/Reynolds. The
group includes Meriwether Capital Corp. and BPU Reynolds. Meriwether's
founder, George O'Neill, is chairman of BPU Reynolds. ("Meriwether Capital,
BPU Reynolds Group Purchases Sherwin Alumina
Refinery From Alcoa," Business Wire, Jan. 3, 2001)
Twenty-three U.S. smelters consumed 7.34 million metric tons of alumina in
1999.
U.S. aluminum producers imported about 3.9 million tons of alumina each
year from 1991 to 1994, mainly from Australia (73%). Jamaica (10%), and
Suriname (6%). Imports remained around 3.9 million tons in 1998 and 1999.
Again, Australia (62%), Suriname (15%), and Jamaica (9%) were the leading
alumina sources. (Plunkert, 2000; "Bauxite and Alumina," U.S. Geological
Survey, Mineral Commodity Summaries, January 1996)
Venezuela
Bauxilum is a subsidiary of Corporación Aluminios de Venezuela S.A..
(CAVSA) that produces bauxite and alumina. In August 2000, Pechiney and
Billiton were the finalists in a $260 million bid to boost production by
15% at Bauxilum. Alusuisse (now part of Alcan) owns a 1% stake in Bauxilum.
("CVG delays decision," VHeadline.com, Aug. 2, 2000)
C. Aluminum
Aluminum smelting technique has not changed much over the past century. The
basic process -- Hall-Heroult electrolysis -- has been around for many
decades. The first step in smelters is the dissolving of alumina in a
molten cryolite bath. Electric current passes through the solution,
separating alumina into aluminum and oxygen.
Four kinds of technology execute this process. Many plants, especially
those in developing countries, employ the Soderberg method of turning
alumina into aluminum. There are two basic types of Soderberg aluminum
reduction technology: horizontal stud (HSS) and vertical stud (VSS). The
other two technological groups are prebaked: centerwork prebaked (CWPB) and
sidework prebaked (SWPB).
CWPB technology is generally cleaner, more efficient, and more automated
than the others. However, as a MIT team noted, "due to the large size of
capital investments required for modernization of smelter technology, all
four technologies are still in use." These scientists estimated global
production in the four technological categories, as follows, in 1995: CWPB:
11.3 million tons/year; VSS: 3.7 million; HSS: 2.0 million; SWPB: 1.9
million. (Harnisch et al)
Of the 67 operational smelters for which the employed technology could be
determined during this study's research, 36 employed the Soderberg
technology, while
29 used the more modern pre-bake method. Of the 36 Soderberg plants, only
five were located outside Latin America, Africa, Eastern Europe and Asia.
Soderberg plants are notorious polluters. They demand more energy and emit more fluorine, carbon dioxide and perfluorocarbons (highly potent
greenhouse
gases) than smelters employing pre-bake technology.
"Cheap power is the key to low-cost smelting," offers the Financial Times.
"So smelters are often built in seemingly odd places, such as Siberia,
Iceland and Dubai, purely because of their access to cheap energy.
Amazingly, it can make economic sense to import bauxite or alumina to
Siberia, smelt it and then export the aluminum again. (From an engineer's
point of view, Zaire offers the world's best site for a new smelter.
Political risk is a different question, of course.)" (Gillian O'Conner,
"Financial Times - 2000 industrial survey: Why the aluminium business works
differently," on FT.com)
In the 1980s, as tariffs lowered in the developing world, aluminum smelting
began to proliferate in Latin America, Asia and the Middle East. "With the
relaxation of tariff barriers, strongly supported by the U.S. Aluminum
Industry, the location of new manufacturing resources will be increasingly
determined by access to new markets and favorable labor and energy costs,
as well as regional tax benefits," read a brief by the Aluminum Association
in March 1996 that predicted increasing investment in Asian aluminum
smelting capacity.
Early in the 1990s, shortly after the breakup of the former Soviet Union
and the 50% decline of its military-industrial economy, Russian aluminum
producers began flooding Western markets with cheap aluminum, and the
resulting global glut, temporarily halted this trend.
"We cannot ignore the fact that, with minimal demand at home, the Soviet
smelters may continue putting substantial amounts of aluminum on the world
market and the rest of the industry will have to adjust to this reality.
Obviously, anyone with a smelter project on the drawing boards will do well
to take a second look and re-think the project," said Bill Bourke,
then-chairman of Reynolds Metals, in 1991. (Financial Times (London), Nov.
22, 1991).
In the mid-1990s, the end of the Western recession, growing demand in
emerging market economies, and the privatization of national-owned aluminum
companies sparked another wave of transnational corporate investment in
developing countries. Global aluminum consumption reached a record 18.9
million metric tons in 1997, a 5.4% increase over 1996 levels (Mining
Journal, June 5, 1998)
After another hiccup -- the Asian economic crisis -- aluminum consumption
is growing steadily again and exceeded 27 million tons in 1999. Consumption
grew by an annual rate of 3% from 1990 to 1998, and 3.9% from 1998 to 1999.
The transportation industry has the heaviest aluminum appetite (6.9 million
tons in 1998), which is growing at a rate over 5 percent per year. (FT.com;
Mining Annual Review, March 2000)
In 2000, the U.S. Geological Survey predicted that "aluminum demand in the
United States and the rest of the world should remain strong with the major
growth area continuing to be the transportation industry, especially the
automotive market." (Plunkert, 2000)
Industry shift As energy and other capital costs rise, old smelters are being shut down . Aluminum smelting is shifting steadily to developing countries in Africa, Latin America, the Middle East, and Asia. In the late 1980s, the industrialized western world became a net importer of aluminum from developing countries. The trend of increasing production concentration in developing countries is "likely to continue well into the (21st) century," predict Harnisch et al. An agreement that commits the industrialized west to greenhouse gas emissions reductions could enhance this dynamic. "At present it is unclear whether the Kyoto Protocol will accelerate or mitigate these global trends.
The outcome greatly depends on whether innovative financing mechanisms can be developed that help to abate greenhouse gas emissions in the (developing) countries, while at the same time preserving the competitiveness of their aluminum industry." (Jochen Harnisch, Ian Sue Wing, Henry Jacoby, Ronald Prins, "Primary aluminium production: climate policy, emissions and costs," paper presented at the Kyoto and Montreal
Protocols' Joint Expert Meeting, Petten, May 1999)
Growth regions
Africa
In 2000, with aid from the International Finance Corp., a consortium led by
Billiton completed construction of a 250,000 ton per year smelter, named
Mozal, in Mozambique. The owners plan to double the plant's capacity in
future years. (See Banks chapter for more details).
In Richards Bay, South Africa, Billiton owns two smelters that produce more
than 3% of the world's aluminum. Billiton newer 466,000 ton Hillside
smelter, and its older Bayside smelter, have a combined capacity of 690,000
tons per year. The two smelters form one of the world's largest smelter
complexes. (Billiton website,
www.billiton.com/newsite/html/investor/aboutus/Hillside&Bayside.htm;
"Industry Overview," www.isa.org.za/industry_overview/sectors/metals.htm)
Elsewhere in Africa, Kaiser controls the 200,000 ton Valco smelter in
Ghana; Pechiney built a 90,000 ton smelter (Alucam) in Cameroon; and
Bechtel has conducted a feasibility study for a new aluminum smelter in
Guinea, with Alusuisse's backing. (Roger Moody, "The Gulliver File - Mines,
people and land: a global battleground," published by Minewatch, 1992;
Kaiser 10-K, FY1999)
Asia
- China
In China, aluminum production grew by 9.7 percent from 1998 to 1999,
reaching a record total of 2.6 million tons. Most Chinese smelters are
small-scale. The largest, Guizhou, produced 227,000 tons in 1999. The other
four largest smelters are Qinghai (205,000 tons in 1999), Baotou (117,000),
Pingguo (110,000), and Qingtonxia (102,000). More than 90 other smelters
produce less than 100,000 tons. (Mining Annual Review, March 2000)
Expansion projects are planned at Baotou (105,000 ton additional capacity
by 2002), Pingguo (200,000 ton possible expansion), Qingtongxia (100,000
ton expansion planned for 2001), and 12 other smelters. (Mining Annual
Review, March 2000)
In Nov. 1999, Alcoa entered into a 30 year agreement to sell at least
400,000 metric tons of alumina to the China State Nonferrous Metals
Industry Administration. (Alcoa 10-K, FY1999)
- India
With abundant bauxite reserves, and cheap energy and labor, aluminum
smelting is on the rise in India.
Aluminum plants in India include the Nalco smelter in Angul, Orissa, a
100,000 ton smelter in Korba owned by Bharat Aluminium, three smelters
owned by Alcan subsidiary Indian Aluminium Company (Indal), and a smelter
owned by Hindalco Industries.
Nalco and Bharat are controlled by the Indian government. Nalco plans to
expand its Angul smelter's capacity from 230,000 to 348,000 tons. The
government has announced that it would sell minority stakes in Nalco and
Balco, but union opposition has stalled the privatization plan.
Indal's 60,000 ton Belgaum smelter has been closed since 1992. The company
closed one potline at its 20,000 ton plant in Alpuram (Kerala). Indal
shifted production to its Hirakud smelter in coal- and bauxite-rich Orissa,
where capacity doubled from 30,000 to 60,000 tons in 1999.
In 2000, Hindalco announced plans to add 100,000 tons of capacity to its
242,000 ton smelter in Renukoot, Uttar Pradesh.
(Stephen Johnston, "Aluminium," Mining Annual Review, March 2000; Business
Today, March 7, 1998; Ashok Sharma, "Nalco production up in April-August,"
Financial Express, Nov. 1, 1999; "Hindalco board okays expansion,"
Financial Express, Jan. 30, 2000; "Production capacities in India," at
www.mitsui.co.jp/alm/statistics/india.html; "Disinvestment Likely To Be Put
On Hold - NALCO May Push Through With Equity Restructuring," Hindu
Business, May 9, 1997)
- Indonesia
A consortium of 12 Japanese companies, backed by $3.1 billion in Japanese
government financial aid, holds a majority stake in the 225,000 ton Inalum
smelter in North Sumatra. (Indonesian Commercial Newsletter, Nov. 25, 1991)
Latin America
- Argentina
Argentine company Aluar boosted its capacity from 176,000 to 260,000 tons
in 1999. Most of this production is shipped to Japan, the U.S., and Europe.
(Reuters, Feb. 3, 2000)
- Brazil
Large smelters in Brazil include Alumar (350,000 tpy capacity), Albras
(340,000), and CBA (225,000).
- Chile
Noranda has proposed building a 440,000 ton aluminum smelter in Chile. This
plan awaits commitments from financial partners and the Chilean government.
(Stephen Johnston, "Aluminum," Mining Annual Review, March 2000)
- Venezuela
Venezuela is seeking investors in its aluminum industry, which is fueled by
vast bauxite reserves and cheap hydroelectric power. (Venezuelan Commercial
Office)
The Venezuelan Corporation of Guayana (CVG) is installing a new 250,000 ton
potline at the Alcasa smelter in Bolivar State, which would more than
double its 210,000 tpy capacity. CVG is trying to attract foreign investors
in the $800 million project. Reynolds (now part of Alcoa) owns a 7.3% stake
in Alcasa. (Venezuelan Commercial Office)
CVG's Venalum subsidiary operates a 430,000 tpy smelter. Six Japanese
partners (Showa Denko, Kobe Steel, Sumitomo Chemical, Mitsubishi Aluminum,
Mitsubishi Metal, and Marubeni Corp.) own a 20% stake in the Venalum
smelter, the ninth largest in the world. (Venezulean Commercial Office)
Middle East
"Cheap fuel, labor, and locational advantage" help the region compete in
the global aluminum market, reported Gulf Business Online in November 2000.
"The aluminium industry in the Arabian Gulf region has never had it so
good."
In the year 2000, the region's two main smelters, Alba of Bahrain and Dubal
of the United Arab Emirates, exceeded one million tons of production
capacity, and accounted for 8% of global production. Alba and Dubal rank
among the five largest smelters in the world.
Planned smelters in Kuwait, Qatar, Abu Dhabi, and Oman might be taken off
the shelf, as European capacity shrinks and global consumption rises.
(Roger Jacobson, "Future looks bright for the GCC aluminium industry," Gulf
Business Online (Dubai), Nov. 9, 2000)
- Bahrain
The Aluminium Bahrain (Alba) smelter is a dominant economic force in this
tiny country of 635,000 people squeezed into land one-fifth the size of
Luxembourg. Oil production is the only industry that is bigger. Dubal is
slated to expand from 496,000 to 750,000 tons per year of capacity.. The
company started producing 120,000 tpy in 1971.(European Institute for
Research on Mediterranean and Euro-Arab Cooperation, October 2000, on
website: http://www.medea.be/en/index023.htm; Middle East Business
Intelligence, Jan. 5, 1996; AFP, Aug 27, 1995; Moneyclips, Nov. 21, 1996)
- Egypt
The Egyptalum 200,000 ton smelter is targeted for an expansion to 300,000
tons per year of capacity.
- Iran
Iran hosts a long-time producer, Iralco (120,000 tons per year), and a new
and troubled plant, Al-Mahdi. Another smelter has been proposed on Qeshm
Island, using discarded technology from a retrofitted plant in Slovakia
(see Banks chapter for more details).
Dubal of the UAE provides technical services to the 200,000 tpy Al-Mahdi
smelter. The government of Iran owns a majority share of Al-Mahdi, with the
rest owned by International Development Corp. of Dubai. International
Development Corp.'s investors included fugitive billionaire Marc Rich (see
Corporations chapter), U.K. construction company George Wimpey, Caradel
Investments, and former UAE ambassador to London, Mahdi Al-Tajir. (Mining
Annual Review, June 1992)
- Oman
Dubal is pondering the construction of a new $2.5 billion, 480,000 ton
smelter in Oman.
(Rasha Owais, "Dubal studies Oman smelter project," Gulf News, April 10,
1999)
- U.A.E.
Dubal Aluminum (Dubal) opened in 1979 and expanded from 375,000 to 536,000
tons of capacity in 1999, making it the third largest smelter in the world.
(Bricad Associates website, http://www.bricad.com/aluminium/dub/index.html;
Dubal website, www.dubal.co.ae)
III. Corporate Control
"Historically, the main agents of the mining developments in the Third
World in general and Africa in particular have been private companies from
the major capitalist countries, even though they were constantly supported
by their respective states. Mineral specialization in the Third World thus
developed within the framework of an international extension of the
oligopolistic structure of the advanced capitalist economies of Western
Europe and North America," observed Samir Amin of The United Nations
University in 1988. (Samir Amin, "Mining in Africa today - Strategies and
prospects," The United Nations University, 1988)
Six companies -- Alcoa, Kaiser, Reynolds of the U.S., Alcan of Canada,
Pechiney of France, and Alusuisse of Switzerland -- long dominated the
aluminum production cycle. These six majors controlled half of the bauxite
mining, two-third of the alumina refining, and seven-tenths of the aluminum
smelting operations of the capitalist world in 1988. (Amin)
Compared to other industries, notes the Financial Times, the aluminum
industry has an "unusual structure, with many of the larger companies
vertically integrated -- operating right through the production chain,
starting with digging up the bauxite and finishihng by producing metal..."
(Gillian O'Connor, "Hyperactivity in a strong market," Financial Times,
2000 on FT.com website)
In the year 2000, merger-mania struck the aluminum corporate sector,
reinvoking historic fears of monopolism.
When aluminum production developed in the late 1800s, two companies --
Alcoa and Pechiney -- dominated the industry. The firms controlled patents
on Bayer technology for alumina refining and Hall-Heroult technology for
aluminum smelting. (Amin) Alcoa also controlled patents on bauxite mining
and hydroelectric technologies (www.endgame.org). "A long period of
technological monopoly enabled these enterprises to acquire hydroelectric
facilities and bauxite deposits while increasing their production scale.
When their monopoly of the technology ended, they found themselves in a
position of economic monopoly, based on increasing returns to scale," wrote
Amin.
Alcoa's monopolistic grip in the U.S. loosened a bit by the second World
War. In 1945, a U.S. appeals court declared the corporation to be a
monopoly, and forced it to spin off its Canadian sister, the Aluminium
Company of Canada (Alcan). The courts also ordered the sale of smelters
that the government built during the war, using Alcoa technology, at a low
price to Reynolds and Kaiser. (www.endgame.org/primer-history.html;
www.clt.astate.edu/crbrown/alcoa.htm; "Alcoa's actions may catch Justice's
eye," Purchasing Online, Oct. 10, 1999)
Now, Reynolds, the third largest producer, has returned to the Alcan fold.
(see below) Also in 2000, the second largest producer -- Alcan -- attempted
to merge with the fifth and 14th largest firms, Pechiney and algroup (a
division of Alusuisse Lonza). Pechiney withdrew from the proposed combine
early in the year. This reduced the conglomeration's rise against the new
Alcoa/Reynolds force.
Alcoa now hold over 4.7 million tons of aluminum production capacity
dwarfing Alcan's 1.9 million. The third largest transnational producer,
Billiton, holds 0.9 million in poroduction capacity. (Financial Times,
"Aluminum/Current Trends," on FT.com)
As in the primary aluminum sector, Alcoa, Alcan, and Billiton dominate the
alumina refining component of the industry. Last year, Billiton gained
Reynolds' majority hold on the massive Worsley refinery in western
Australia. The U.S. Dept. of Justice mandated this sale in the resolution
of its anti-trust complaint against Alcoa and Reynolds' merger.
Revneues are up for the biggest producers. Billiton earned $577 million in
the fiscal year ending June 30, 2000, up 51 percent from the previous year.
(Commerzbank Securities, "Billiton company report," August 30, 2000) In the
first three quarters of 2000, Alcoa's earnings rose 65% from 1999. Income
rose from $853 million to $1.3 billion. (Alcoa 8-Q, FY1999)
The largest companies, reported the Financial Times, benefit from vertical
integration that enhances their ability to stablize prices and dictate
growth. "Although concerted action by the industry is anathema to
competition authorities, particularly in the US, self interest means that
some of the larger companies have been willing to act as 'swing producers':
cutting output when prices are falling, increasing it when they are
rising," the FT reported in 2000. "Some smelters that were mothballed in
the 1990s remain out of action... But the existence of those mothballed
smelters puts an effective cap on prices. Meanwhile, capacity is being
steadily increased, in line with growth expectations." (Gillian O'Connor,
"Hyperactivity in a strong market," Financial Times, 2000 on FT.com
website)
Table. Transnational Giants
Corporate aluminum production in 1999
(metric tons per year)
Company Capacity Primary production
Alcoa/Reynolds 4,256,000 3,800,000
Alcan/Alusuisse 1,372,000 1,744,000
Billiton 886,000 890,000
Pechiney 828,000 827,000
Hydro 745,000 749,000
Comalco 659,000 654,000
Aluminum Bahrain 537,000 515,000
CVG (Venezuela) 520,000 482,000
Kaiser 510,000 413,000
Dubal 424,000 433,000
VAW 421,000 421,000
Ormet 256,000 256,000
Source: CRU International, as reported in "Who's Who: Mergers, takeovers in
high summer," Financial Times at FT.com website.
Some less traditional transnational corporations have assumed significant
roles in the aluminum production cycle:
* Marc Rich, the former U.S. citizen and tax evader pardoned by President
Bill Clinton (known to some as "Aluminium Finger"), has invested in an
Iranian smelter, traded in aluminum exports from Russia, owned alumina
refineries in the Caribbean, and is hoping to benefit from a World
Bank-backed bauxite/alumina complex sale in Guinea.
* xxxxx
#1 Alcoa (including Reynolds)
ALCOA INC.
(a/k/a Aluminum Company of America)
201 Isabella Street
Pittsburgh, PA 15219
1999 revenues: >$16 billion
Chairman, President, and CEO
Alain J. P. Belda
www.alcoa.com
REYNOLDS METALS COMPANY
6601 West Broad Street
P.O. Box 27003
Richmond, VA 23261
1999 revenues: >$4.6 billion
In 1886, an Ohio chemist named Charles Martin Hall discovered the process
of electrolyzing alumina into aluminum, the same year that Paul Heroult
made the same discovery in France. In 1888, Hall, with backing from the
Mellon Bank, helped to found the Pittsburgh Reduction Company and built a
pilot plant and soon launched a global and revolutionary expansion. In
1907, the company name was changed to the Aluminum Company of America.
("Biography, Charles Martin Hall," on Oberlin College Archives website,
www.oberlin.edu/~archive/WWW_files/hall_cm_b.html. Oberlin maintains many
of Hall's records, including extensive filings from lawsuits, from this
early era of the aluminum industry.)
The company maintained a monopolistic position in the industry through
World War II, after which the U.S. government ordered the company to sell
several smelters and sever its ties to Alcan.
In 1943, George Seldes wrote in Facts & Fascism (published by In Fact) that
"By its cartel agreement with I.G. Farben, controlled by Hitler, Alcoa
sabotaged the aluminum program of the U.S. air force. The Truman Committee
[on National Defense, chaired by then-Senator Harry S. Truman in 1942]
heard testimony that Alcoa's representative, A.H. Bunker... prevented work
on our $600,000,000 aluminum expansion program.
"Thurman Arnold, as assistant district attorney of the United States, his
assistant, Norman Littell, and several Congressional investigations, have
produced incontrovertible evidence that some of our biggest monopolies
entered into secret agreements with the Nazi cartels and divided the world
up among them. Most notorious of all was Alcoa, the Mellon-Davis-Duke
monopoly which is largely responsible for the fact America did not have the
aluminum with which to build airplanes before and after Pearl Harbor, while
Germany had an unlimited supply."
"If America loses this war," said Secretary of the Interior Harold Ickes in
1941, "it can thank the Aluminum Corporation of America." (George Seldes,
Facts & Fascism (In Fact, 1943), pp. 68, 140-144.
Alcoa Inc. remains the world's largest producer of alumina and aluminum,
positions that it solidified with the acquisiton of Reynolds Metals in
2000. Reynolds was the third largest aluminum producer in the world, and
the biggest aluminum foil maker. (Reynolds Metals Co., Form 10-K (FY1999),
annual report to Securities and Exchange Commission, March 3, 2000)
More than half of Alcoa's revenues are generated in the United States
($10.4 billion of $16.2 billion in 1999) (Alcoa Inc., Form 10-K (Fiscal
Year 1999) filed with Securities and Exchange Commssion, Feb. 28, 2000)
On August 18, 1999, Alcoa announced plans to acquire Reynolds Metals
Company (Richmond, Va.), in a $5 billion stock purchase. Reynolds was the
second largest aluminum company in the United States, and third largest in
the world. The U.S. Department of Justice forced Alcoa to sell off
Reynold's alumina refinery stakes before allowing the merger to conclude in
May 2000.
The Justice Dept. charged that the merger "threatens substantial and
serious harm to (alumina) consumers." It asserted that it "will
substantially lessen competition in the refining and sale (of alumina)....
substantially increases the likelihood that Alcoa can unilaterally control
prices and also increases the likelihood that the remaining (alumina)
producers will be able to coordinate to raise prices, harming consumers. As
a result of the proposed merger, higher prices are likely for aluminum and
other products containing alumina." (United States of America, Department
of Justice, Antitrust Division v. Alcoa Inc. and Reynolds Metals Company,
complaint, May 3, 2000)
In its May 3, 2000, settlement with the Justice Department, Alcoa agreed to
sell Reynolds' stakes in alumina refineries in Worsley, Australia (56
percent stake); Stade, Germany (50%); and Sherwin, Texas (100%). It also
agreed to sell one-quarter of Reynolds' interest in an aluminum smelter in
Longview, Washington. On Aug. 29, 2000, Billiton plc agreed to purchase
Alcoa/Reynolds' 56% stake in the Worsley alumina refinery for $1.49
billion. (Alcoa, Form 10-Q, submitted to U.S. Securities and Exchange
Commission, Oct. 20, 2000)
Alcoa's latest merger follows its $3.8 billion takeover of Alumax in 1998.
Alumax was a joint venture between Amax, Mitsui and Nippon Steel. During
the Alumax merger, the Justice Dept. forced Alcoa to sell its aluminum cast
plate operations. The two companies, before the merger, controlled 90
percent of the global market for the manufacture and sale of cast plate.
(U.S. Dept. of Justice, "Justice Department clears Alcoa's proposed
acqusition of Alumax after Alcoa agrees to sell its cast plate operations,"
press release, June 15, 1998; Roger Moody, "Gulliver PUK
(Pechiney-Ugine-Kuhlmann) Dossier" in The Gulliver File - Mines, people and
land: a global battleground, Minewatch, 1992.)
In 1999, Alcoa objected to a U.S. Court of Appeals (Eleventh District)
affirmation of a decision that Alumax owed $411 million in taxes, including
interest, from fiscal years 1984-1986. (Alcoa 10-K, FY1999)
Also in 1999, the DOJ forced Alcoa to sell one of two aluminum sheet
manufucturing plants that it obtained in its $41 million takover of Golden
Aluminum Company from ACX Technologies Inc. (Department of Justice,
"Justice Department requires divestiture in Alcoa's Acquisition of Golden
Aluminum Company," press release, Nov. 5, 1999)
With the Alumax merger, Alcoa's U.S. aluminum smelting capacity surged
from a 31 percent national share (1.3 million metric tons) to 46 percent
(1.9 million). The addition of Reynolds' capacity gives Alcoa a 57 percent
share (2.4 million) of U.S. production capacity. Including Reynolds'
Canadian operations, Alcoa now holds more capacity (3.3 million tons) in
North America than exists in Russia. ("Alcoa's actions may catch Justice's
eye," Purchasing Online, Oct. 10, 1999)
- Alcoa and Bush
In late December 2000, President-elect George W. Bush added Alcoa chairman
Paul H. O'Neill to his stable of corporate cabinet members. He nominated
O'Neill to be the new Treasury Secretary. O'Neill, a former International
Paper president, became an Alcoa director in 1986, and chaired the
company's board from 1987 to 2000. (Brian Knowlton, "Alcoa Chief Picked to
Head Treasury," International Herald Tribune, Dec. 21, 2000; Alcoa 10-K,
FY1999)
Alcoa operates a smelter in Rockdale, Texas. It also plans to strip mine
15,000 acres in two Central Texas counties for fueling the Rockdale
smelter. Bush, as governor of Texas, was criticized by environmentalists
and neighbors of Alcoa's central Texas lignite strip mines for not opposing
Alcoa's plans to stripmine their land and ship massive amounts of
underlying groundwater to San Antonio (see Human Rights chapter)
"We hope that Gov. Bush will recognize our struggle against Alcoa is the
perfect opportunity for him to demonstrate his willingness to protect the
rights of Texans against the wrongs of a few rich, corporate giants," said
Travis Brown of Neighbors for Neighbors, a local group of concerned
citizens. (Peggy Fikac, Express-News (Texas), Oct. 19, 1999)
No such luck. Bush punted all responsibility for the decision to the Texas
Railroad Commission.
On the environment, O'Neill has said, "I don't see environmental issues as
a negative for aluminium or Alcoa, they are our friend. As long as
legislatures and governing bodies don't do stupid things, we'll be fine."
(Aluminium Today, 1999. [xxx need citation xxx])
On workers' health in Mexico, he has said "our plants are so clean they can
eat off the floor." The New York Times recently reported on conditions at
Alcoa's factory in Ciudad Acuna, Mexico. The article describes the working
conditions; employees earning $6 a day, being limited to three sheets of
toilet paper per work, and collapsing from gas leaks.In 1993, 179 workers
were hospitalized by a gas leak. Half of the city's 150,000 residents use
backyard latrines. Alcoa opened the auto parts plant in Acuna after the
signing of the North American Free Trade Agreement, sifting production from
San Antonio, Texas. (Sarah Anderson and John Cavanagh, Institute for Policy
Studies (U.S.), Karen Hansen-Kuhn, The Development GAP (U.S.). and Carlos
Heredia and Mary Purcell, Equipo PUEBLO (Mexico), "No Laughter in NAFTA:
Mexico and the United States Two Years After," 1996)
#2 Alcan/algroup
Alcan
1188 Sherbrooke St. West
Montreal, Quebec H3A 3G2, Canada Phone: 514-848-8000
Fax: 514-848-8115
http://www.alcan.com
Alcan Chairman
John R. Evans
Interim President and CEO
Bill Blundell
algroup (former division of Alusuisse Lonza)
Feldeggstrasse 4, Postfach 495
Zurich CH-8034, Switzerland Phone: +41-(0)1-386-22-22
Fax: +41-(0)1-386-25-85
http://www.algroup.ch:
Chairman Martin Ebner
CEO and Managing Director Sergio Marchionne
Alcan/algroup combined 1999 revenues: $12.3 billion
In 1902, Alcan opened as a Montreal, Canada,-based subsidiary of the
Pittsburgh Reduction Company (renamed Alcoa in 1907). It established its
first smelter and hydroelectric power plant in Shawinigan, Quebec. In
1928, Alcan began to splinter from Alcoa. During World War II, Alan opened
numerous new plants in Quebec, and in the 1950s, opened a plant in British,
Columbia. Later, it opened operations outside Canada. (Alcan 10-K, FY1999)
A three-way merger between Alcan, Pechiney, and algroup (the aluminum
divsiion of Alusuisse Lonza) fell apart in early 2000. Facing obstacles
from the European Union and the U.S. DOJ, in April 2000, the "A.P.A."
partners announced that Pechiney would wiithdraw from the three-way merger.
They decided that "divestments which would ultimately be required to meet
the objections of the European Commission would seriously undermine the
strategic viability of the combined company's rolled products business in
Europe." (Alcan-Pechiney-Algroup, "Merger will not proceed," joint press
release, April 13, 2000; also, Plunkert, 2000)
On Oct. 18, 2000, Alcan completed its merger with the Alusuisse Lonza's
algroup division. The algroup shareholders gained a 34 percent share in
Alcan. (Alcan press release, Oct. 18, 2000)
Alcan describes itself as "one of the most international aluminum companies
in the world." (Alcan press release, Aug. 21, 2000) The company's global
operations include:
* Bauxite mining: full or majjority stakes in Jamaican, Australian,
Brazilian, Ghanaian, and Indian mining companies, and minority shares in
Guinean (CBG) and Brazilian (MRN) producers.
* Alumina refineries: full stakes in Brazil (Ouro Preto in Sramenha, Minas
Gerais) and Canada (Vaudreuil in Jonquiere, Quebec); majority stakes in
India (Belguam in Karnataka and Muri in Bihar) and Jamaica (Kirkvine and
Ewarton); and minority stakes in Australia (Gladstone) and Brazil (Alumar).
* Full stakes in seven Canadian smelters with a combined capacity of 1.1
million tons; two small Brazilian smelters, three small U.K. smelters, and
a small U.S. smelter, and majority stakes in two small Indian smelters.
Alcan's share of smelting capacity outside of Canada totals 515,000 tons.
(Alcoa 10-K, FY1999)
Alcan's global operations include the Indian Aluminium Company (Indalco),
Alusuisse has numerous operatrions beyond aluminum production, including
pharmaceutical and cosmetics packaging (through its Wheaton subsidiary) and
food and tobacco packaging (through its Lawson Mardon subsidiary).
#3 - Billiton
Billiton Plc
1-3 Strand
London
WC2N 5HA
United Kingdom
Tel: 44 (0) 20 7747-3800
Fax: 44 (0) 20 7747-3900
Web: www.billiton.com
Revenues in 1999: $4.6 billion
CEO/Chairman: Brian P. Gilberton
In 1860, Billiton adopted articles of association in The Hague. The company
took its name from an island, also spelled Belitung, in the Dutch colony
that became Indonesia. In 1861, the company shipped laborers from China to
the island between Sumatra and Borneo and started digging its first
concession: a tin reserve. Billiton shipped the tin, and lead, to its
smelters in the Netherlands. ("History of Billiton," from www.billiton.com;
"Dutch imperialism, " from www.gimonca.com/sejarah/sejarah05.html)
The Royal Dutch/Shell Group bought Billiton in 1970. In 1994, Gencor of
South Africa bought a majority stake in the company from Royal Dutch/Shell.
In 1997, the non-precious metals assets of Gencor and the minerals
businesses of Royal/Dutch Shell spun off into an independent Billiton that
is now based in London. ("Billiton Plc, Hoover's Company Profile Database -
World Companies 2000; "History of Billiton")
The company moved into the bauxite mining business in the 1940s, when it
began mining bauxite in Indonesia and Surinam. It no longer mines bauxite
in Indonesia, but continues to do so in Surinam, where it runs a bauxite
mine and holds a 45% interest in an alumina refinery.
The company's aluminum interest span the globe. In October 2000, Billiton
took control of Reynolds alumina refinery in Worsely, Australia, which the
U.S. Dept. of Justice ordered sold in the Alcoa/Reynolds merger. Billiton
now owns an 86% stake in the reinery and nearby bauxite mine in Western
Australia. It also controls the Gove bauxite mine in the Northwest
Territories. (Commerzbank Securities, "Billiton company report," August 30,
2000)
Billiton also owns interests in mines, refineries and smelters in Brazil,
South Africa, Mozambique, and Australia. It holds a 15% interest in a
Brazilian company, Mineracao Rio do Norte S.A., which runs one of the
world's largest bauxite mines. It also is a part-owner of the Alumar
alumina refining and aluminum smelting complex in Brazil, and another
Brazilian smelter, Valesul. It owns two aluminum smelters in Richards Bay,
South Africa. Billiton owns 47% of a new smelter that opened in Mozambique
in 2000. Also in 2000, Billiton acquired Reynolds' share of the massive
Gladstone bauxite mine/alumina refinery complex. The company is bidding to
take-over the state-run Venezuelan aluming company, CVG, for $3 billion.
("Billiton background" at www.mbendi.co.za/orgs/cegi.htm; "History of
Billiton"; "Billiton scoops giant Australian alumina miner," Financial
Post, Aug. 30, 2000)
Billiton digs many other minerals. It mines copper and zinc in northern
Quebec, Canada. It operates open pit and underground coal mines in South
Africa through its Ingwe subsidiary. The company mines coal in Australia
and Colombia, and ranks as the world's leading exporter of thermal coal.
Also in South Africa, the company mines zinc from an open pit, and heavy
mineral sands from the coastline. Billiton subsidiary QNI is one of the
world's top five nickel and cobalt producers. Its operations in Colombia
and Australia produce 6% of the world's nickel and 7% of the world's
cobalt. Its chrome mining operations in South Africa and manganese mining
pits in Australia and South Africa rank as the world's largest. ("Billiton
background" at www.mbendi.co.za/orgs/cegi.htm; "History of Billiton";
Hoover's)
Through the $1.2 billion Rio Algom purchase, Billiton also acquired copper
mining companies in Chile (100% of Cerro Colorado), Argentina (25% of
Alumbrera), and Canada (33.6% of Highland Valley). Rio Algom also holds
development rights to a copper and zinc mining project in Peru and a copper
mining project in Chile. In addition to copper and zinc, Rio Algom
distributes uranium and coking coal. (Commerzbank Securities)
For the past 25 years, residents of the Mole Lake/Crandon region have
fought plans to develop a zinc-copper sulfide mine, citing potential toxic
discharges and groundwater depletion. Ojibwe people from the Mole Lake
Reservation farm nearby rice beds. Billiton acquired this proposed mining
site when it bought Rio Algom in October 2000. ("Nader calls on South
African company Billiton to drop Crandon mine plans in Wisconsin," press
release, October 30, 2000)
Billiton is exploring the possiblity of mining lead and zinc in LanPing,
China. This mine would be located near a new massive 958 foot-high dam on
the Mekong River. (www.prop1.org/nucnews/2000nn/0008nn/000804nn.htm)
"Billiton is ambitious," reported Financial Times in 2000. "It has been
keeping a close eye on both Venezuelan privatization prospects and possible
disposals by Brazil's CVRD." ("Who's Who: Mergers, takeovers in high
summer," Financial Times at FT.com website.)
#4 - Pechiney (France)
Pechiney
Headquarters:
7 Pl. du Chancelier Adenauer
Paris, 75116
Telephone: 33-1-5628-2000
Website: www.pechiney.com
CEO: Jean-Pierre Rodier
1999 revenues: $10.1 billion
Pechiney began producing aluminum in 1860. Its operations now span the
globe.
Aluminum accounted for 31.6% of Pechiney's net sales in 1999. It produces
bauxite, alumina, primary aluminum, and secondary aluminum in Australia,
Cameroon, Canada, France, Greece, Guinea, and the Netherlands. Relevant
subsidiaries and affiliates include Aluminium Pechiney, Affimet, Alucam,
Aluminerie de Bécancour, Aluminium Dunkerque, Aluminium de Grèce, ECL,
Friguia, Pechiney Nederland, QAL, and Tomago Aluminium. (Pechiney 1999
Annual Report on www.pechiney.com)
Pechiney's technology, which Heroult pioneed in the 1880s, is used in other
smelters around the world. Nalco in Orissa, India (the largest aluminum
smelter in southern Asia) utilizes Pechiney technology and engineering
servies for its bauxite mining, alumina refining and smelter operations.
(Department of Mines, Government of India, "Mining and Processing: Natioanl
Aluminium Company Ltd.," chapter in Annual Report 1999-2000; see:
www.nic.in/mines; Rajaram Satapathy, "NALCO expansion plan gets off the
ground," Times of India, July 3, 2000)
Other major Pechiney product lines include aluminum and steel beverage cans
(it is the world's largest producer), plastic packaging, and ferroalloys.
Pechiney also invests heavily in uranium mining; for example, in Niger, it
is in a joint venture to mine uranium from the Arlit mine. Arlit hold
estimated reserves of 34,500 tons. The French government, the mine's
primary customer, subsidizes the mining operation. ("Niger - Mining:
Uranium Mining," at www.mbendi.co.za/indy/ming/urnm/af/ni/p0005.htm)
Exerpts from...
Roger Moody's "Gulliver PUK (Pechiney-Ugine-Kuhlmann) Dossier" (published
in 1992)
(Courtesy of The Sustainable Energy and Anti-Uranium Service Inc. Visit
http://www.sea-us.org.au)
"It is hardly surprising that, worldwide, Pechiney (formerly
Pechiney-Ugine-Kuhlmann or PUK) has run into more opposition for its
aluminium operations than its nuclear interests. It is the fourth largest
aluminium producer in the world. It is also France's only aluminium
producer (2), and the largest in Europe.
"Moreover, when it acquired American National Can for US$1bn in 1988, it
became the world's largest producer of metal drinks cans.
"Pechiney is owned 75% by French state interests (10% of which is in the
hands of Assurances Generales de France, acquired in 1990. Although plans
to privatise Pechiney were high on the agenda (after the group finished
restructuring in 1986, the French socialist government has so far applied a
brake to both privatisation and nationalisation.
"By 1988, the company saw an upturn in its fortunes, with the saving of two
domestic smelters planned for closure earlier in the decade and
construction of another in Normandy; its nuclear fuels activities proving
"highly profitable"; a JV under discussion with the USSR which would be the
first of its kind; and highly successful returns from its ventures in the
USA, especially Howmet Turbine.
"Pechiney was set up in 1855, began producing aluminium five years later,
and - with a spectacular rise in output prior to WW2 - took over several
companies on the way. In 1971 it merged with Ugine-Kuhlmann.
"Spurred by major losses in its aluminium sector and a downturn in
production of 6% in 1983, Pechiney expanded its two French smelters, but
was squeezing the rest. The same year, it acquired a stake in a
"hypothetical" French nuclear power station in return for cheap power to
run its remaining smelting capacity, drawn from any stations run by
Electricite de France. Under the chairmanship of Georges ("I hate to lose
money") Besse, the new, beaming, loud-talking, joke-cracking President
Directeur General of the company, Pechiney's fortunes were beginning to
turn by mid-1984.
"Pechiney's chemical assets were sold to Elf-Aquitaine, Rhone-Poulenc and
CdF Chemie after Giscard d'Estaing and Mitterand both blocked a potentially
lucrative sale to Occidental Petroleum. The loss-making steel interests
have also been hived off. Cash to finance the huge FFr 3,000,000,000
investment programme was to be found in an agreed sale of the Howmet
Aluminium Corp to Alumax (a JV between Amax, Mitsui and Nippon Steel). In
the event, Howmet remained under Pechiney's control, with Alumax gaining a
half interest each in Howmet's Maryland and Washington smelters.
"This half-sale of Howmet's smelter interests was part of a redeployment of
Pechiney's North American aluminium operations from the USA to Quebec.
"Environmentalists in New Zealand also fought hard against the siting of a
smelter in the beautiful valley of Aramoana, where Pechiney replaced
Alusuisse as the chief foreign partner in a consortium headed by Fletcher
Challenge and CRA in 1982 (14). But talks over the siting of a power plant
for cheap power broke down (15) and the project was shelved (2).
"Meanwhile the Spanish government was tussling with Pechiney over who would
pick up the bill for losses on the 67%-owned Alugasa aluminium subsidiary
(16), and it finally kicked Pechiney out in 1982 (2).
"Pechiney has a 35% interest (along with Gove Aluminium, 59% controlled by
CSR) in the Tomago smelter in New South Wales which came on stream in late
1983, exporting aluminium to Japan: plans to expand the smelter by 50% were
underway in 1990.
"The construction of the smelter was energetically opposed by local farmers
and environmentalists. The smelter is set in the wine-growing region of
Hunter Valley. A large plant producing 230,000 tonnes of aluminium a year
at about $1000/tonne - its ultimate capacity is more than 700,000 tonnes.
Pechiney is employing a new, secret smelting process, purportedly replete
with environmental controls to remove fluoride, and a new form of waste
containment using "excavated cells" covered in two metres of clay.
"In the Netherlands, Pechiney Nederland opened up a controversial smelter
in Vlissingen. (Passengers escaping from Olau ferries after collisions with
Comurhex nuclear cargoes in the Channel can catch a glimpse of it as they
rush to bright lights of Amsterdam). The smelter was the subject of intense
public debate, and opposition from environmental groups on health and
economic grounds
"Pechiney participates in Friguia, a holding company which has a 51 %
interest in alumina production in Guinea. The Frialco consortium is owned
30% by Pechiney, 30% by Noranda, with Alcan and Hydro Aluminium holding 20%
each. Pechiney also mines bauxite and produces alumina and aluminium in
Greece.
"India got Pechiney's technical advice in 1980 when it drew up plans for a
bauxite treatment and aluminium complex in Orissa.
"Soon after Bernard Pache took over the helm at Pechiney in 1985 from
Georges Besse (who had graduated into the company from Cogema), he began
soliciting atomic and other business in Japan, hoping to sell the whole
range of Pechiney's nuclear fuel facilities; fuel for light water reactors,
fabrication of zirconium products (through its Cezus subsidiary), the
production of uranium hexafluoride, and fabrication of fuel elements
themselves.
"Three years later, Uranium Pechiney, together with Cogema and Framatome,
took a 49% share in the US fuel supplier Babcock & Wilcox (B&W Fuel
Company). In 1991, Framatome was negotiating to take control over B&W
Fuel, as well as B&W Nuclear Service Company.
"But its most important nuclear role has probably been as the 50% holder of
Minatome, which - under the 1982 reorganisation - was bought out by
CFP/Total and merged with Total's subsidiary Total Compagnie Miniere.
"Until 1982, Minatome mined uranium inside France, notably at St
Pierre-de-Cantal, using its 94%-owned subsidiary Scumra and producing
100t/year U3O8. Outside of France, Minatome had shares in uranium mines in
Namibia (10% of Rossing), Niger (6.7% of the Somair consortium at Arlit),
and has been exploring for the deadly metal in the USA, Australia (at Ben
Lomond), Colombia, Brazil, Ireland, Britain and Mauritania, not to mention
Namibia.
"Uranium mining activities undertaken by Pechiney in its own name include
grabbing a share in the lucrative Cluff Lake project, managed by Amok as
the controlling partner in Cluff Mining Ltd; Amok itself is owned as to 25%
by Pechiney. Lower down the line, the wholly-owned subsidiary Uranium
Pechiney took a share in a uranium-from-phosphoric acid recovery plant
operated by Gardinier, planned for the early 1980s but which appears to
have closed by 1982. In Algeria the company was studying uranium reserves
in 1977; a contract that year for a feasibility study was awarded to
Pechiney and Minatome, Sogerem (a Pechiney subsidiary), and Stec.
"Five years later, Uranium Pechiney won a US$32M contract to provide
processing technology, engineering and equipment for
uranium-from-phosphates extraction in Tunisia, after Gardinier and PUK
conducted a feasibility study on the project. The unit was to be built at
Gabes on the Mediterranean coast, but plans for extraction had not
materialised by 1984.
"The company's most controversial deals have been with South Africa and in
South America. In the late '70s the French nuclear industry won a large
part of the apartheid republic's burgeoning nuclear power/weapons
programme. The contract for the first South African nuclear power station
(Koeberg 1) went to a consortium headed by Framatome (controlled by
Creusot-Loire which is itself part of the huge Empain-Schneider group that
controlled Pechiney). At roughly the same time, the South African
government announced an agreement with a consortium headed by PUK,
including Creusot-Loire and Westinghouse, to provide uranium enrichment and
fuel fabrication facilities. This arrangement was superseded with the
development of Nufcor's own Pelindaba enrichment plant.
"The Argentinian military dictatorship did, however, in the early '80s
select a consortium headed by PUK to cooperate with the Argentinian CNEA in
opening up the Sierra Pintada uranium deposits. The following year the USA
stopped its own shipments of uranium to Argentina because the military
state refused to sign the Nuclear Non-Proliferation Treaty and, within
another year, the Soviet Union was sending the country 20% enriched
supplies of U-235 in exchange for grain.
"Also, at the beginning of 1981, Pechiney announced it had won a contract
to build Brazil's first uranium hexafluoride plant for Nuclebras. The
plant, to be constructed at Resende near Rio de Janeiro, would employ
Pechiney's own technology and start up in 1985, with an initial production
of 450 or 500 tonnes. The deal completed Brazil's attempts for a decade (in
fact since the West German-Brazilian nuclear pact) to complete the nuclear
fuel chain on its own territory.
"At the same time PUK was assisting Nuclebras to construct the Pocos de
Caldas uranium mining complex, specifically the Otsamu Utsumi mine in Minas
Gerais which officially opened in May 1982, although production started in
December 1981. PUK participated in the actual construction of the mine and
provided technical expertise.
"Although the West German government built Brazil's uranium enrichment
plant in late 1983, the Brazilian regime asked Alsthom-Atlantique, another
French-state-controlled engineering company, to supply vital compressors
for the plant. The Brazilian Minister of Mines and Energy, Cesar Gais, also
visited France to discuss with Pechiney the possibility of using a new
uranium mining procedure developed by Pechiney.
"Uranium Pechiney developed this process to treat high clay ores and
dispersed clays containing uranium, gold and other materials not previously
economically recoverable. This 'physico-chemical' process purportedly
transforms clay into porous granular material ready for solid-liquid
separation.
"It was later reported that both Pechiney and Cogema were trying to
implement a plan to extract uranium and phosphoric acid from openpit ore at
Itataia in Brazil - an "innovative" development since the two are not
chemically bound together. The US$300M project was agreed in April 1984 and
was intended to process up to 20,000 tonnes a day of ore, producing some
2600 tonnes a year uranium, thus making it one of the more important new
uranium ventures.
"The deposit, 200km south-west of Fortelaza in Ceara state, has an
estimated 80,000 tonnes of contained uranium. Pechiney would be responsible
for the project engineering and Cogema for the purchase of any of the
Itataia uranium (46).
"An irony, not lost on anti-nuclear groups concerned with weapons
proliferation, is that both the West German and French governments have
enormously assisted Argentina and Brazil to acquire nuclear weapons
although (one might say because) the two countries, despite a recent
nuclear pact, have long considered the other capable of launching an atomic
attack on "their" soil.
"By the turn of the eighties, Pechiney had established itself as one of the
world's most important aluminium producers, its most significant
manufacturer of metal cans, and one of the few diversified conglomerates
not to have reduced its commitment to nuclear fuel production and
processing.
"In 1991, it saw its plans to start up a smelter at Nasiriva, in Iraq,
dashed by the horrendous conflict between the Saddam Hussein regime and the
Bush administration for control of Kuwait, and had to shelve plans (formed
with Austria Metall, Alumined Beheer and RTZ) to build the Atlantal smelter
in Iceland.
"In Venezuela, an agreement with Aluminium del Caroni SA, the state-owned
company, to construct a smelter on the Orinoco river, was shelved for
financial reasons. But, in 1990, Pechiney agreed to a new project with
Alisa (Aleaciones Ligeras SA) to operate a Venezuelan smelter, to be
constructed by Davy McKee.
(Above from Roger Moody, "Gulliver PUK (Pechiney-Ugine-Kuhlmann) Dossier"
in The Gulliver File - Mines, people and land: a global battleground,
Minewatch, 1992. Courtesy of The Sustainable Energy and Anti-Uranium
Service Inc. Visit http://www.sea-us.org.au)
#5 - Norsk Hydro (Norway)
Norsk Hydro
Hydro Aluminium Metal Products
Bygd¿y Allé 2
Oslo, 0240
Telephone: 47-22-43-21-00
Fax: +47 22 73 79 30
Website: www.hydro.com
1999 revenues: $13.1 billion
CEO: Egil Myklebust
In 1905, Norsk Hydro ASA opened shop, harnessing hydro-electric power in
Norway for the first industrial-scale nitrogen fertilizer plant in the
world. While Norsk Hydro is still in the "plant nutrition" (ammonia, urea,
and other fertilizers) business, it is now a diversified and global
company, the largest publicly-owned firm in Norway.
The aluminum sector, which it entered in 1967, is a major piece of Norsk
Hydro's operations. In 1998, Hydro produced 747,000 tons of primary
aluminum, mostly at its four smelters in Norway (Karmøy, Høyanger, Sunndal
and Årdal). Hydro generates its own hydroelectric power for these smelters.
"Energy, in the form of hydroelectric power, natural gas and petroleum, has
been the basis for Hydro's growth and is the common link among its core
business activities," reads the company's 1999 annual report. (Norsk Hydro
ASA, Form 20-F (FY-1999), filed with the United States Securities and
Exchange Commission).
he company also owns a 49.9 percent stake in Sør-Norge Aluminium A/S
(Søral), which operates another smelter in Norway. Hydro is in a
partnership with Goldendale Aluminum in the United States in the production
of 159,000 tons of aluminum per year. It also an collaboration with Talum,
a small Slovenian smelter, and is a 10% investor in Slovalco, a smelter in
Slovakia heavily backed by the European Bank for Reconstruction and
Development (see Banks chapter).
In 2000, Hydro started a 10-year agreement to purchase a total of one
million tons of aluminum from Companhia Vale do Rio Doce's Albras smelter
in Brazil. The company is studying a possible new 474,000 ton per year
smelter in Trinidad and Tobago. (www.hydro.com)
Hydro's aluminum business is growing, geographically and fiscally. Hydro
realized 50 percent growth in its light metals sector operating income from
1999 to 2000. ("Preliminary results 2000: Strong growth and record
results," Norsk Hydro press release, Feb. 12, 2001)
Hydro supplied only 60 percent of its alumina requirements internally, low
compared to giants like Alcoa. It holds a 35 percent interest in the
Alpart, Jamaica, alumina refinery controlled by Kaiser, and a 25 percent
share in the Alunorte refinery consortium in Brazil. These supply a
combined 905,000 tons of alumina to Hydro's smelters. (Norsk Hydro, Form
20-F)
In a high stakes quest for a captive supply of alumina, Hydro is engaged in
a tense battle with indigenous peoples over its planned joint venture (with
Alcan) to mine and refine bauxite in Orissa, India (see Human Rights
chapter).
Norsk Hydro's other major corporate segments include oil and gas
exploration and development (mainly on the Norweagian continental shelf,
Canada, Libya, Angola, Russia and soon, Iran), industrial insurance,
pharmaceuticals, and petrochemicals such as polyvinyl chloride. Hydro spun
off its agricultural operations, including the world's largest fish farming
company, in 2000. (www.hydro.com)
#6 - Rio Tinto / Comalco
Rio Tinto
6 St. James's Square
London SW1Y 4LD
United Kingdom
Phone: 44 (0) 20 7930 2399
Fax: 44 (0) 20 7930 3249
2000 revenues: $10.0 billion
Website: www.riotinto.com
Chairman: Sir Robert Wilson
Comalco Limited
ACN 004 502 694
Level 25, 12 Creek Street
Brisbane, Queensland 4000
Australia
Telephone: +61 7 3867 1711
Facsimile: +61 7 3867 1775
1999 revenues: A$2.3 billion (Comalco only)
Website: www.comalco.com.au
The sole business of Comalco, a wholly-owned subsidiary of Rio Tinto, is
bauxite mining, alumina refining, and aluminum smelting. The Weipa bauxite
mine in Queensland, Australia, is Comalco's cash cow. In 1957, Commonwealth
Aluminium Corporation and British Aluminium Company formed a partnership
named Comalco, which signed an 84 year lease with the Queensland Government
to mine the Weipa bauxite. (www.comalco.com.au) Comalco owns 100% of the
massive Weipa pit, which produced over 11 million tons of bauxite in 2000.
The Weipa bauxite is processed two refineries. Comalco owns a majority
stake (56% stake) in the Sardinia, Italy, alumina refinery Eurallumina,
which produced 575,000 tons of alumina from Weipa bauxite for Comalco in
2000. It owns a 30% stake in Queensland Alumina Ltd. (Australia), which
refines almost one million tons of Weipa bauxite for Comalco annually. Last
year, the company decided to add site a new 1 million ton per year alumina
refinery in Queensland, ruling out a possible location in Sarawak,
Malaysia. (see Human Rights chapter)
Comalco also owns a 4% production share of the Boké, Guinea, bauxite mining
operation.
In 2000, it produced 701,000 tons of primary aluminum from three smelters
its 100%-owned smelter in Bell Bay, Tasmania, its 54%-owned smelter on
Boyne Island, Queensland, and its 79%-owned smelter on Tiwai Point, New
Zealand.
In 1999, Rio Tinto increased its interest in Comalco to 72%. Rio Tinto
continued to increase its majority stake in Comalco through 1999 and in
February 2000 made an offer for all the outstanding shares.(Stephen
Johnston, "Aluminium," Mining Annual Review, March 2000)
The company is now a wholly-owned subsidiary of Rio Tinto, an infamous
global metals producer. Aluminum accounted for 16 percent of Rio Tinto's
turnover in 2000. Its other mining operations, which span the globe,
include industrial minerals (590,000 tons of borate, 1.4 million tons of
titanium dioxide, 21% of turnover), iron ore (64 million tons, 11% of Rio
Tinto turnover), copper (865,000 tons mined, 15% of turnover), gold (2.7
million ounces mined, 15% of turnover), coal and uranium oxide (combined
17% of turnover, 132 million tons of coal, 2,195 tons of uranium oxide).
("Rio Tinto Earnings Grow 18 per cent to US$1,507 million," Rio Tinto press
release, Feb. 5, 2001)
Since the start of 2000, in addition to the Comalco sublimination, Rio
Tinto took control of an iron ore, copper, and uranium oxide producer named
North for $2 billion, diamond and gold producer Ashton for $400 million,
the Lemington coal mine for $134 million, and the Australian coal assets of
Peabody for over $500 million. (ibid)
#7 - Aluminium Bahrain (Alba)
Aluminium Bahrain
P.O. Box 570
Bahrain
Tel. 973 833448
Fax 973 833833
Website: www.aluminiumbahrain.com
Chief Executive: Karim Salimi
Revenues: not available
The government-controlled Aluminium Bahrain (Alba) smelter is a dominant
economic force in the Persian Gulf emirate .Oil production is the only
industry that is bigger in Bahrain. The company started producing 120,000
ton of aluminum per year in 1971.
The smelter started as a joint venture between the Bahrainian government
(18%), General Cable (17%), British Metal (17%), Kaiser (17%),
Electrokopper (17%), Breton Investments (9.5%), and Western Metals (8.5%).
The government of Bahrain now owns 77% of Alba's shares. The balance is
held by the Saudi Public Investment Fund (20%) and Breton Investments (3%).
(www.aluminiumbahrain.com/intro/share.htm)
Alba is slated to expand from 496,000 to 750,000 tons per year of capacity.
Five engineering companies (SNC Lavalin of Canada, Sofresid of France, and
U.S. firms ICF Kaiser, Bechtel, and Fluor Daniel) are bidding to draw up a
feasibility study and master plan for the $1 billion expansion project.
(European Institute for Research on Mediterranean and Euro-Arab
Cooperation, October 2000, on website: http://www.medea.be/en/index023.htm;
Middle East Business Intelligence, Jan. 5, 1996; AFP, Aug 27, 1995;
Moneyclips, Nov. 21, 1996; "Bahrain Country Profile" at
worldinformation.com)
#8 - CVG
Corporación Venezolana de Guayana
Avenida Guayana con Carrera Cuchivero
Edificio Sede CVG
Altavista, Puerto Ordaz,
Estado Bolívar, Venezuela.
Phone: 58 (86) 661735
Fax:: 58 (86) 614161
Website: www.cvg.com
The governement launched the Venezuelan Corporation of Guayana (CVG) in
1960 to promote industrial development in the Guayana region. Its Bauxilum
subsidiary mines over 4 million tons of bauxite a year.
It is installing a new 250,000 ton potline at the Alcasa smelter in Bolivar
State, which would more than double its 210,000 tpy capacity. CVG is trying
to attract foreign investors in the $800 million project. Reynolds (now
part of Alcoa) owns a 7.3% stake in Alcasa. (Venezuelan Commercial Office)
CVG's Venalum subsidiary operates a 430,000 tpy smelter. Six Japanese
partners (Showa Denko, Kobe Steel, Sumitomo Chemical, Mitsubishi Aluminum,
Mitsubishi Metal, and Marubeni Corp.) own a 20% stake in the Venalum
smelter, the ninth largest in the world. (Venezulean Commercial Office)
The state corporation also produces steel, hydroelectric power, and power,
engages in industrial agriculture and forestry, and promotes tourism.
(www.cvg.com)
#9 - Kaiser / Maxxam
Kaiser Aluminum
Maxxam Group Holdings
5847 San Felipe, Suite 2600
Houston, Texas 77057
Phone: 1-713-975-7600
Kasier president: Ray Milchovich
Maxxam CEO: Charles Hurwitz
2000 Kaiser revenues: $2 billion
Website: none
Kaiser is a subsidiary of Maxxam Inc., which owns 63% of Kaiser's common
stock. The balance of Kaiser's stock is publicly held. (Maxxam Group
Holdings Inc., Form 10-K (Annual Report, FY1999), filed with Securities and
Exchange Commission, March 13, 2000)
While giants like Alcoa, Alcan, and Billiton thrive through mergers,
expansion, and acquisitions, Kaiser has struggled. It lost $39 million in
the third quarter of 1999, and $17 million in the third quarter of 2000.
(ibid)
In the midst of the Alcoa and Alcan mergers, Kaiser president Ray
Milchovich said it was like "dancing with elephants" 10 times your own
size. Financial Times reported that "he added - admittedly in the context
of the company's protracted steelworkers' lockout - that Kaiser needed to
display agility, flexibility, and behavior appropriate to its size and
complexion.... Kaiser, which has suffered an explosion at its Gramercy
refinery, on top of its labor dispute, is respected for its tough
management style and its ability to keep ancient plants running. Its
alumina operations are low cost and it is also one of the five companies
that have signed an exclusive 10-year supply deal with Boeing." Boeing's
other corporate suppliers are Alcoa, Kaiser, Hoogovens and Pechiney.
(Gillian O'Connor, "Hyperactivity in a strong market," Financial Times,
2000, and "Who's Who: Mergers, takeovers in high summer," Financial Times
at FT.com website)
Beginning in January 1999, Kaiser locked out United Steelworkers union
members from working at its U.S. operations, including two aluminum
smelters (the 200,000 ton per year Mead and 73,000 ton per year Tacoma,
Wash. plants) and the Gramercy, La., alumina refinery. In April 2000, the
National Labor Relations Board's general council said the federal
government would charge Kaiser violated labor laws by initiating the
lockout.
(Institutional Shareholder Services, "ISS supports dissident director
nominees at Maxxam," filed by the Committtee of Concerned Maxxam
Shareholders with the SEC, May 22, 2000)
A July 5, 1999, explosion at its alumina refinery in Gramercy also
contributed to the drop in revenues. Replacement workers were injured in
the explosion in the digester area of Kaiser's 1.075 million ton alumina
refinery in Gramercy, Louisiana. Twenty workers were injured, and three
sustained severe disabling injuries. The explosion closed the plant,
sprayed bauxite up to two kilometers away, and severely curtailed bauxite
production in Jamaica. (Stephen Johnston, "Aluminium," Mining Annual
Review, March 2000)
According to the Mine Safety and Health Administration of the U.S. Labor
Departmetn, "the immediate cause of the explosion was an excessive pressure
build up in pressure vessels in the digestion process area of the facility,
following an electrical fault causing a power distribution failure... MSHA
found deficiciencies in the pressure relief safety systems, which MSHA
concluded were violations of the regulations." Kaiser agreed to pay
$513,000 in penalties to resolve the agency's complaint. (Secretary of
Labor, "Secretary's revised motion to approve settlement and motion to
dismiss," Kaiser Aluminum & Chemical Corp. v. Secreatary of Labor et al,
penalty proceedings, Office of Administrative Law Judges, Federal Mine
Safety and Health Review Commission, 2000; "Alcoa, Alcan increase earnings
in third quarter," New Steel, Dec. 1999)
While Kaiser's U.S. operations remain in turmoil, it is expanding its
aluminum operations overseas. International operations include a 90 percent
stake in the 200,000 tpy Valco smelter in Ghana; a 49% stake in the 135,000
ton per year Anglesey smelter in Wales, U.K., a 65% stake in the Alpart
baxuite mining/alumina refining venture in Jamaica, a 49% stake in the KJBC
bauxite mining venture in Jamaica, and a 28% stake in the Queensland
Alumina refining company in Australia. (Maxxam 10-K) In 1996,
Kaiser/Maxxam reported that it had a pending collaboration with the huge,
749,000 ton, Krasnoyarsk smelter in Russa and a pending project, named
Kyril, to collaborate with smelter developments in Lanhzou and Lianhai,
China. (Maxxam Inc., Amendment No. 2 to Form S-3 filed with SEC on April
12, 1996)
After 718 days, Kaiser and the Steelworkers reached a settlement in Sept.
2000, and the lockout finally ended. (Karen Dorn Steele, "Analysts call
aluminium company's settlement a win for solidarity," Spokesman-Review,
Sept. 24, 2000)
Then, Kaiser used a novel approach to turn a profit in the fourth quarter
of 2000. Instead of reopening its Washington state smelters, the company
decided to sell its allotment of federally-produced power on the open
market, thereby benefitting from the growing energy crisis in the western
USA (see Energy chapter). It reported net income of $10.9 million in the
fourth quarter of 2000. "In the fourth quarter, the company sold power
provided by its existing contract with the Bonneville Power Administration
amounting to approximately $135 million," a Kaiser press release reported.
(Kaiser Aluminum Corp., "Kaiser Aluminum Reports Results for Fourth
Quarter, Full Year of 2000," press release, Feb. 7, 2001)
Kaiser's corporate parent, Maxxam, is run by chairman/CEO/president Charles
Hurwitz, who is the target of many union and environmental activists. (See,
for example, www.jailhurwitz.com and www.uswa329.org) Fortune Magazine
recently ranked Maxxam's board as one of the 10 worst in the United States,
citing Hurwitz' dominance. (Spoekesman-Review, Sept. 24, 2000)
Maxxam and Hurwitz took control of Kaiser in 1988, allegedly with the
backing of Marc "Aluminum Finger" Rich (see below). The corporate parent's
main business is logging, particularly cutting down redwoods and Douglas
Firs in California, through its Pacific Lumber subsidiary. Maxxam also
develops real estate in Puerto Rico, Arizona, and California, owns a horse
racing park in Houston, and a greyhound racing track in Harlingen, Texas.
"Hurwitz started out a crook and he hasn't stopped since," wrote Darryl
Cherney, a California redwoods activist. In the early 1980s, Hurwitz was
found guilty of illegal stock market
dealings.(www.jailhurwitz.com/sevensins.html)
In 1995, the U.S. Treasury Department's Office of Thrift Supervision (OTS)
initiated an action that alleges midsconduct by Hurwitz and Maxxam in the
failure of United Savings Association of Texas, a savings and loan company.
This failure forced a federal bailout totalling $1.6 billion. The OTS is
seeking either $821 million in resititution, or reimbursement of $362
million for "unjust enrichment." (ibid; Maxxam 10-K, FY1999)
#10 - VAW (Germany)
VAW aluminium AG (Vereinigte Aluminium Werk)
Georg-von-Boeselager-Str. 25
53117 Bonn / Germany
Tel: + 49 / 228 - 552 2312
Fax: + 49 / 228 - 552 213
Website: www.vaw.com
Annual revenues: DM6 billion
VAW is an independently-run subsidiary of a German electricity congolmerate
formed by the merger of Veba and Viag, which merged in 1999. ("Who's Who:
Mergers, takeovers in high summer," Financial Times at FT.com website.)
In the 1970s, VAW established its two smelters, both in Germany (Elbewerk
in Stade and Rheinwerk near Neuss) in the 1970s, when it also build the AOS
alumina plant in Stade. Beginning in the 1990s, VAW began exporting
technical support and engineering collaborations at smelters like Alusaf in
South Africa, Novokuznetsk in Russia, and Boyne Island in Australia. (VAW
Aluminium-Technologie GmbH, "Company information," at
http://www.vaw-atg.de/company.html)
VAW's alumina refinery in Stade imports bauxite from the CGB consortium in
Guinea, in which VAW is an investor. (see Basics chapter) VAW also owns
several rolling mills in Europe, and owns a 24% world share in the high
purity aluminum business. It acquired high purity aluminum market leader
Mitsubishi in 1999. (Stephen Johnston, "Aluminium," Mining Annual Review,
March 2000
The company boasts that "from beverage cans and peel-off lids for yoghurt
pots to toothpaste tubes, from packaging for tablets through engine
castings and car body components to roller blinds and printing machines -
in nearly all areas of life, aluminium products made by VAW play a key
role. VAW produces flexible packaging for the food and pharmaceutical
industries, strip and foil mainly go into packaging, automotive,
applications and offset printing or are used as façade cladding.
Furthermore, VAW is the world's leading supplier of aluminium engine blocks
and cylinder heads." ("VAW aluminium AG at
http://www.sovereign-publications.com/vaw.htm)
In October 2000, the Financial Times reported that "VAW is heading for the
auction block, following Viag's merger with Veba, to form energy group Eon,
which is now
getting rid of non-core interests.... VAW, whose most attractive assets are
probably its half-share in the Norf rolling mill and its auto engine block
casting business, is estimated to be worth Dollars 2.5bn-Dollars 3bn. Norf
is the largest rolling mill in the world, while VAW is the world leader in
aluminium engine blocks." (Gillian O'Connor: VAW continues to attract much
attention," Financial Times, October 25, 2000)
#11 - Dubal (U.A.E.)
Dubai Aluminium Company Limited
P.O.Box : 3627 Dubai
Tel : 04-8846666/8022926
Fax : 04-8846919
CEO: Ian Rugeroni
Website: www.dubal.co.ae
1998 revenues: Dh2.46 billion
"The starting point for us was indubitably the vision of Dubai's Ruler, His
Highness the late Sheikh Rashid bin Saeed Al Maktoum who decreed that a
smelter should be built," asserts Dubal CEO Rugeroni. "With the leadership
of HH Sheikh Hamdan bin Rashid Al Maktoum, Chairman of Dubal, and our Vice
Chairman, H.E. Mohammed Al Abbar, supported by a dedicated management team
and a workforce of over 2000 employees, we have been able achieve much of
what was originally planned." ("Productivity in Partnership at
http://www.sids.com/update/april98/dubai.htm)
Dubal Aluminium (Dubal) opened in 1979 and expanded from 375,000 to 536,000
tons of capacity in 1999, making it the third largest smelter in the world.
(Bricad Associates website, http://www.bricad.com/aluminium/dub/index.html;
Dubal website, www.dubal.co.ae; "Dubal Sales, Output Break Records," May
25, 1999 at www.useinteract.com)
The company's reach is transnational. Dubal is pondering the construction
of a new $2.5 billion, 480,000 ton smelter in Oman and provides technical
services to the 200,000 tpy Al-Mahdi smelter in Iran. The government of
Iran owns a majority share of Al-Mahdi, with the rest owned by
International Development Corp. of Dubai. International Development Corp.'s
investors included fugitive billionaire Marc Rich, U.K. construction
company George Wimpey, Caradel Investments, and former UAE ambassador to
London, Mahdi Al-Tajir. (Mining Annual Review, June 1992; Rasha Owais,
"Dubal studies Oman smelter project," Gulf News, April 10, 1999)
It imports 60,000 tonnes of alumina every three weeks from Alcoa's Kwinana
refinery in Western Australia. Australian Trade Minister Mark Vaile met
with Dubal's Rugeroni last year, after the CEO expressed concerns over
labor unrest at Kwinana. A ministry press release reported that "meeting in
Dubai with senior managers of Dubal, Mr Vaile said Australia was fully
committed to meeting its alumina supply obligations to the company with a
contracted value of $1.4 billion over the next eight years."
"All our export customers, especially a smelting operation such as Dubal,
must have reliability of supply. We simply cannot afford to have our
reputation as a reliable supplier damaged. The jobs of Australians in vital
export industries must not be put at risk by the selfish action of others,"
said Mr. Vaile. (Australian Minister for Trade, "Reassurance on alumina
supplies," media release, March 3, 2000)
#12 - Ormet (USA)
Ormet Primary Aluminum Corporation
1233 Main Street, Suite 4000
Wheeling, WV 26003
Phone: (304) 234-3900
Toll Free: (800) 331-6950
Fax: (304) 234-3929
Phone: 304-234-3900
CEO/Chairman: R. Emmett Boyle
1998 revenues: $780 million
Website: www.ormet.com
R. Emmett Boyle owns 100% of Ormet, which was established in 1956 by Olin
Corporation and Revere Copper and Brass, Inc. "to produce primary aluminum
for sale in equal measure to the parent companies." In 1986, Boyle bought
out the company from its then-owner, Alusuisse, and restarted its shuttered
Burnside, La., alumina refinery.
. (http://www.ormet.com/ormet/history.html)
Since 1957, Ormet has operated an alumina refinery in Burnside, La., and a
smelter in Hannibal, Ohio. Production capacity at Burnside could reach 1
million tons under a modernization program launched in 1999.
(www.ormet.com; Plunkert, 2000)
According to the United Steelworkers of America, Boyle secretly funneled
money in a 2000 campaign against the re-election of an Ohio judge that he
views as pro-union.
"The Ohio Elections Commission is investigating charges that a committee,
which includes the leaders of two companies that have a history of locking
out Steelworkers, violated campaign financing laws in the November state
supreme court races," reported the USWA in November 2000.
"The smear campaign against an Ohio Supreme Court justice who has sided
with labor's causes was financed by a secret $3 million slush fund that
included solicitations by Emmett Boyle, who locked out Steelworkers at
Ravenswood Aluminum in 1990. Boyle is now heard of Ormet Corp., where
Steelworkers have been working without a contract since May 31, 1999.
"Resnick won reelection handily and many observers feel the campaign
spearheaded by the Ohio Chamber of Commerce did her more good than harm.
Steelworkers joined with other unions in Ohio to raise money to help
Resnick overcome the Chamber's onslaught.
In that campaign, television ads suggested that Justice Resnick took bribes
from special interests.
"The Ohio Chamber was able to raise that amount of money ($3 million) in
part because donors were assured that their contributions would be kept
secret. Some Ohio businesses also received calls from Republican Gov. Bob
Taft soliciting money for the smear campaign.
"Shortly after the election, the Ohio Elections Commission found 'probable
cause' that the chamber committee violated the state's election laws by
refusing to release the names of contributors to the anti-Resnick campaign
and for suggesting Resnick made decisions based on campaign contributions.
A hearing will be held sometime after the first of the year to investigate
the charges further. ("Enemies of Labor under investigation," Steelabor,
Nov-Dec. 2000 at http://www.uswa.com/steelabor/NovDec00/aksmear.htm)
Other Notables
Hoogovens / Corus Group
Corus Group plc
15 Marylebone Road
London, NW1 5JD
England
Tel.: 020 7 314 5500
Fax: 020 7 314 5600
Chairman: Brian Moffat
Hoogovens Aluminium BV
Postbus 10000, 1970 CA,
IJmuiden Vondellaan 10
1942 LJ Beverwijk
Netherlands
Tel: 0251-499108
Fax: 0251-470220
Giant British Steel and Hoogovens, a Dutch aluminum and steel producer,
merged in 1999 and created the largest steel company in Europe, named
Corus. According to the Financial Times, "Most industry observers expect
the British Steel-Hoogovens merger eventually to prompt the disposal of
Hoogovens' aluminium interest." ("Who's Who: Mergers, takeovers in high
summer," Financial Times at FT.com website; Stephen Johnston, "Aluminium,"
Mining Annual Review, March 2000)
Hoogovens imports alumina from Suriname, owns a 97,000 ton smelter in
Delfzijl, Netherlands, and a 80,000 ton smelter in Voerde, Germany, and has
aluminum divisions in Belgium and Quebec. (Tom Stunza, "Aluminum merger and
acquisition activity accelerates," Purchasing Magazine, Oct. 7, 1999)
WMC Ltd.
WMC Ltd.
(formerly named Western Mining Corporation)
360 Collins St. 31st Floor
Melbourne, Victoria 3000
Australia
Phone: 61-3-602-300
CEO: Hugh Morgan
WMC holds an interest in the Suralco bauxite mining joint venture, with
Alcoa and Billiton, in Surinam. In 1994, WMC entered into a global alumina
refining joint venture with Alcoa, and owns 40% of the venture, Alcoa World
Alumina & Chemicals. When the two companies combined alumina operations,
the venture had anual revenues of close to $3 billion a year.("Alcoa
Acquires Discovery Alumina Chemicals Business," Industrial Specialties
News, July 10, 1995)
Prior to Alcoa's purchase of Reynolds, the WMC/Alcoa venture controlled
more than 30 percent of global alumina capacity. (American Metal Market,
January 26, 2001)
In October 2000, when asked about the implications of the Alcoa-Reynolds
combine, WMC's chief executive officer, Hugh Morgan replied , "The direct
implication is AWAC acquired some additional bauxite resources in Africa
and South America. Under the AWAC agreement between Alcoa and WMC,
anything involving the acquisition of bauxite, alumina or alumina chemicals
goes in the AWAC pot. Also, the justice department ruling means AWAC cant
purchase additional alumina capacity thats sold to the traded marketplace
(i.e. the material thats not vertically integrated). But this doesn't limit
internal expansions. AWAC has tremendous growth opportunities." ("Open
Briefing WMC CEO Morgan on Record Profit," Australian Associated Press
Company News, Aug. 15, 2000)
WMC is also a major miner of uranium, gold, and nickle. ("The Bechtel
Truth - Notes for the Alternative AGM of WMC," Roxby Action Collective,
Nov. 20, 1997 at http://www.sea-us.org.au/roxby/bechteltalk.html)
Marc Rich
Marc Rich & Co. Holding
Baarerstrasse 53
6304 Zug
Switzerland
Phone: 041/709.08.44
Fax: 041/709.08.29
Billionaire Marc Rich lives in Zug, Switzerland, where he moved in 1983
just before the U.S. government gained an indictment against him for
evading corporate taxes of $48 million, fraud, and circumventing the U.S.
oil embargo against Iran. He renounced his U.S. citizenship, paid a $113
million settlement check, but remained a fugitive until President Bill
Clinton pardoned him in a controversial last-hour order in January 2001.
Rich is a secretive tycoon who holds the nickname "Aluminum Finger."
("Aluminium Finger" reference from untitled article, Evening Standard, Jan.
30, 1996)
In addition to his aluminum interests, Rich "also has been accused of
smuggling oil to South Africa during apartheid and of selling embargoed
Iraqi oil," reported The Nation (Feb. 12, 2001). The New York Daily News
(Jan. 28, 2001) said Rich "went from New York University dropout to
mailroom clerk to modern-day alchemist, turning lead and aluminum - and
smuggled oil - into pots of gold.... (Although there is) no conclusive
proof, Rich and his shadowy companies are said to have looted gold from the
collapsing Soviet Union, sold Korean weapons to Iran, illegally cornered
the tin and aluminum markets, made off with chunks of the Gross Domestic
Product of Finland and Romania and jumped into bed with the Russian mafia."
(Helen Kennedy, "Ruthlessness is Rich's game," New York Daily News, Jan.
28, 2001)
"With a potent combination of trading genius, nerves of steel and
tissue-thin morals, Rich became a billionaire, buying and selling oil and
metals in fiendishly complicated maneuvers," the Daily News explained.
(ibid).
Rich pressed his case to President Clinton in fear of possible retribution
from former Alcoa president O'Neill. O'Neill is President Bush's new
Treasury Secretary. According to the Wall Street Journal (Jan. 23, 2001),
"People close to Mr. Rich said the need for a pardon took on an added sense
of urgency with the impending change of an administration. Of particular
concern to Mr. Rich was the appointment of Paul O'Neill as Treasury
secretary... One of Mr. Rich's metal-trading company's scooped up Alcoa's
bauxite and alumina production in Jamaica. 'Rich was frightened O'Neill
would get the government to come after him again,' a person familiar with
the federal manhunt for Mr. Rich said. Treasury officials said they
wouldn't comment on the matter."
In the mid-1980s, when demand for aluminum dropped, Alcoa closed the
Jamalco bauxite mining/alumina refining complex in Clarendon Parish. In
response, the Jamaican government signed a 10 year suply contract with Rich
and assumed responsibility for production at Jamalco. In the 1990s, with
alumina markets tightening, Alcoa resumed its role as managing partner of
Jamalco. (Canute James, "Jamaica metals market improves - Bauxite,"
Financial Times, Feb. 12, 1990; "Discover Mandeville" at
http://discoverjamaica.com/gleaner/discover/tour_ja/tour7.htm)
Rich shipped bauxite to his alumina refinery, Vialco, on St. Croix, U.S.
Virgin Islands. Vialco was sold to Alcoa in 1995. (Bob Regan, "Alcoa
refinery spared by Hurricane Lenny," American Metal Market, Nov. 19, 1999)
In 1983, Rich opened an office in Moscow. Soon, he supplied the Soviet
Union with grain in contrvention of U.N. embargo over the Afghanistan war,
and heavily traded in aluminum.. By 1992, Marc Rich engaged in an estimated
$3 billion of trade in the countries of the former Soviet Union. Former
Russian Trade Minister Oleg Davydov attributed the rising corruption in his
country in part to people like Marc Rich. When "legal channels became
inconvenient [for Russia's new businessmen], there appeared a huge mass of
foreign entrepreneurs, mostly crooks like Marc Rich, who began to teach
us various ways of taking the money out through offshore companies. That
is what bred our whole system of corruption and criminality," he told
Forbes magazine in 1998. (Kirill Vishnepolsky, "Glencore International
strikes root in Russia," RusData DiaLine - BizEkon News, April 30, 1996;
Oleg Davydov, "Tomorrow they will take up arms: A chat with Russia's former
trade minister," Forbes, Sept. 7, 1998; "El drama en el sector del
aluminio," June 27, 1998, on eluniversal.com,
http://noticias.eluniversal.com/1998/06/27/OP15.shtml)
Rich bought Kaiser's smelter and rolling mill in Ravenswood, West Virginia,
in 1988; two years later, he locked out the plant's unionized workers. In
one of labor's shining moments of the early 1990s, Steelworkers picketed
Rich's home in Zug, chased him with a puppet of West Virginia labor icon
Mother Jones, and blocked his purchase of a smelter in Czechoslovakia.
("Pardon draws protests; Rich fled after indictment, was involved in Kaiser
deal," Spokesman Review, Jan. 26, 2001)
Rich helped to leverage Hurwitz' takeover of Kaiser Aluminum in 1988 when
he agreed to purchase $400 million worth of Kaiser's aluminum. (Cherney)
He was an investor in the International Development Corporation (IDC) of
Dubai, United Arab Emirates, which built the Al-Mahdi smelter in the
mid-1990s. In 1990, IDC proposed a smelter in Algeria, named Medial.
Rich divested himself of many of his aluminum holdings in March 1993, when
he agreed to sell his shares in Marc Rich & Co., which became Glencore
International. In 1994, Rich sold his last 25% stake in Glencore. ("Market
news," The Mining Journal, Nov. 11, 1994)
In 1996, Rich returned to commodities trading, operating out of a company
named Marc Rich & Co. Holding. According to the Financial Times, "Rich said
he had no doubt that there was room for another commodity trading business,
despite the rise of other physical giants in the intervening period,
including AIOC, Trans-World Metals, the Balli Group and Glencore, most of
which have developed strong business links with the aluminium industry -
the metal he was famed for trading in. 'We plan to be active in aluminium,
copper, zinc, lead, nickel, metal and concentrates, in addition to crude
oil, petroleum products, grain and coal. Obviously, I feel the prospects
for a company trading in commodities is good,' he said. (Rachel Carnac,
"Rich return sets the markets buzzing," Financial Times, February 9, 1996)
In 1998, Rich expressed an interest in aquiring Noranda's share of the
Friguia bauxite/alumina operation in Guinea, according to Mining Annual
Review (Dec. 1999). Noranda and the other foreign partners, Alcan and
Hydro, sold their 51% stake to the Guinean govenrment in late 1998. The
government, prompted by the World Bank (see Banks chapter), opened bids for
an 85% strake in Friguia. It pre-selected Marc Rich, Anglo American,
Comalco, and Kaiser to bid. In February 1999, however, the government put
the bidding on indefinite hold. Friguia's managers have also been courting
investment from Iran. Iran is seeking bauxite and alumina for its two
smelters, one of which Marc Rich helped to develop. ("New delay in Friguia
privatization," Africa Energy & Mining, Feb. 17, 1999; "Four pre-qualified
for Friguia," Africa Energy & Mining, Dec. 2, 1998)
Chapter IV. Multilateral and bilateral financial institutions
As we have seen with other energy-intensive industries (see EBRD, two WB
reports), multilateral development banks and agencies funded by industrial
governments are helping to finance the aluminum industry’s global
expansion.
Not coincidentally, this industry, worldwide, is dominated by transnational
corporations based in the countries that are financing their power plants,
mines, refineries and smelters. National development banks help
corporations based in their country sell equipment to foreign aluminum
operations and gain ownership stakes in old and new infrastructure.
These institutions have poured over $3 billion into dams and other power
plants that fuel aluminum smelters, into structural adjustment and other
programs designed to open bauxite mines, alumina refineries, and smelters
to foreign investors, and into feasibility studies and equipment sales by
Western corporations.
Focus on Slovak Rep./ Iran smelters
The European Bank for Reconstruction and Development, a multilateral aid
agency funded and managed by Western governments, agreed to finance an
aluminum smelter refurbishment and privatization in the Slovak Republic in
1994. The Slovalco, or ZSNP, operation doubled its capacity to 132,000
tons. The old smelter, in turn, may be shipped to Iran.
The EBRD loaned Slovalco $110 million in three parts beginning in July
1994. Part of the loan financed an investment agreement in which Hydro
Aluminium and EBRD control 10 percent ($15 million each) of Slovalco’s
equity. It was EBRD’s biggest private sector loan to date. The German and
Dutch governments, and the European Union’s PHARE program, financed
environmental studies and community outreach programs.
The EBRD hailed the agreement as "the centerpiece of the overall
restructuring and privatization of ZSNP in which two inefficient and
polluting smelters will be closed down and other major facilities will also
be closed down or upgraded to meet Slovakian and EU environmental
standards. The new smelter, which will provide employment opportunities for
over 500 people in Ziar, will be one of the most efficient in the world."
(EBRD press release, "EBRD and Slovakian Aluminium smelter sign loan
agreements, July 12, 1994)
The old Slovalco smelter had a poisoned past. In 1996, the Financial Times
reported that a "mountain of red and brown bauxite waste still dominates
the valley approach to the [Slovalco] aluminum works… the legacy of decades
of environmental neglect. Inside the old, inefficient and polluting
smelters have been closed down… [replaced by] the gleaming white and gray
buildings of one of Europe’s most modern aluminum smelters." (Financial
Times, Oct. 23, 1996)
"The new plant will be energy efficient and safe, and will meet good
international environmental standards," boasted the EBRD. "The shut-down of
the existing smelters, together with the start-up of the new smelter, will
have a major beneficial effect on occupational health and external air
quality." ("EBRD industrial projects with significant environmental
benefits: some examples" at
http://www.ebrd.ro/english/enviro/envpub/envfacts.htm/indproj.htm)
But while the EBRD investment replaced chronically-polluting Soderberg
potlines
at the notorious plant with modern pre-bake cells, the old cells may move
to a proposed new smelter on Iran’s Qeshm Island. (Aluminium Today, August
1997)
In 1994, the Center for International Environmental Law (CIEL)termed the
EBRD loan "an especially disturbing example (of) funding of a major
polluter... ZSNP will remain a significant source of pollution in the
region, even though the Bank loan will finance improvements in the
smelter's environmental performance.
"The ZSNP plant, utilizing approximately 10 percent of the total energy
produced in Slovakia, also puts a severe strain on Slovakia's overburdened
electricity generating capacity, supporting the government's contention
that the nuclear power plant at Bohunice, one of the most dangerous in
Central and Eastern Europe, cannot be closed until its capacity can be
replaced....
"The (EBRD) environmental staff submitted a document to the Directors just
prior to the Board's decision to approve the controversial ZSNP loan. CIEL
discovered that the document had been altered to downplay the environmental
impacts of the project. Later communication with Bank staff revealed that
while some alterations were unintentional, others were deliberate. It is
impossible to know whether the misrepresentations in the document
influenced the Board's decision to approve the project. Nevertheless, such
alterations breach the trust placed in Bank staff by the Directors."
(Donald M. Goldberg and David B. Hunter, "EBRD's Environmental Promise: A
Bounced Check?," Center for International Environmental Law, December 1994)
In a 1995 follow-up report, CIEL said called the Slovalco smelter "one of
the region's largest polluters. A bauxite waste site leaches heavy metals
into the soil and groundwater, and the existing factory emits dust, SO2,
NOx, CO, and fluorides far in excess of Slovak and EC air emissions
standards. Off-site testing has revealed high concentrations of
benzopyrene, arsenic, molybdenum, copper, nickel and chromium. Health
problems, including congenital defects, allergies, and thyroid and lung
diseases, are on the rise throughout the region.
"Due to the highly polluting and energy-intensive nature of primary
aluminum production, Slovak environmentalists favored either converting the
plant to secondary aluminum production or closing the plant altogether.
They also argued that the plant made no economic sense. Ideally, for
aluminum production to be economically competitive, a cheap source of
energy, labor, and raw materials should be available. With the exception of
cheap labor, Slovakia has little competitive advantage on the international
aluminum market.
"Nevertheless, the EBRD decided to pursue the project, which already had
been rejected by the World Bank and a number of private investors. Despite
strenuous objections from environmentalists, it was given fast track
status, a protocol that is not provided for in the Bank's Environmental
Procedures. Most of the procedures for public participation were curtailed:
formal notification to the public about the ZSNP project, public scoping,
and public meetings were dispensed with. Bank staff did conduct a pro forma
meeting with a small number of environmentalists a few days before the
project was submitted to the Board, but by that time it was not likely the
project would be altered.
"The ZSNP project demonstrates that, when faced with financial pressures,
the Bank is willing to forego at least some of its environmental due
diligence. A sustainable development policy and stronger environmental
procedures are urgently needed to help the EBRD withstand such pressures
and ensure that each project receives the appropriate level of
environmental analysis and public consultation." (CIEL, "The European Bank
for Reconstruction and Development: An Environmental Progress Report,"
1995, at www.ciel.org)
Focus on former Soviet Union, aluminum, and corruption
Since the fall of the "Iron Curtain," aluminum has flooded Western markets
from the former Soviet Union. Commodities traders Marc Rich and Trans-World
Metals fueled this flood. Foreign governments also got into the act.
As a 2000 U.S. Department of Commerce study noted, "IBRD (the World Bank),
EBRD, the U.S. Export-Import Bank and other countries’ export credit
agencies have been active in attempting to support foreign equipment sales
to Russian aluminum producers." (Nick Mikhailov, "Russia: Production
equipment for the aluminum industry," Business Information Service for the
Newly Independent States (BISNIS), U.S. Department of Commerce, July 31,
2000, at http://bisnis.doc.gov/bisnis/000817rsalum.htm)
The involvement of these government agencies in former CIS states’ smelters
thrusts these officials shoulder-to-shoulder with dangerous company. The
Russia aluminum industry is rife with tales of corruption, the black
market, and even killings.
"Over the years, the Russian media, in particular, has pursued telltale
trails leading to connections with the Russian Mafia, bribery, and unsolved
cases of assassination of journalists and people related to the aluminum
industry," reported American Metal Market in January 2001 ( Christian Kohl,
"Trans-World probe deepens," American Metal Market, Jan. 19, 2001)
- Globalization and Corruption
The globalization of the former Soviet Union’s aluminum industry can be
traced to the year 1983, when fugitive commodities trader Marc Rich (see
Corporate chapter) opened an office in Moscow. Soon, he supplied the Soviet
Union with grain in contravention of U.N. embargo over the Afghanistan war,
and heavily traded in aluminum.
By 1992, Marc Rich engaged in an estimated $3 billion of trade in the
countries of the former Soviet Union. Former Russian Trade Minister Oleg
Davydov attributed the rising corruption in his country in part to people
like Marc Rich. When "legal channels became inconvenient [for Russia's new
businessmen], there appeared a huge mass of foreign entrepreneurs, mostly
crooks like Marc Rich, who began to teach us various ways of taking the
money out through offshore companies. That is what bred our whole system of
corruption and criminality," he told Forbes magazine in 1998. (Kirill
Vishnepolsky, "Glencore International strikes root in Russia," RusData
DiaLine - BizEkon News, April 30, 1996; Paul Klebnikov, "Tomorrow they will
take up arms: A chat with Russia's former trade minister," Forbes, Sept. 7,
1998; "El drama en el sector del aluminio," June 27, 1998, on
eluniversal.com, http://noticias.eluniversal.com/1998/06/27/OP15.shtml)
By 1994, when Rich sold his stake in the trading business that was renamed
Glencore, his company was eastern Europe’s largest Western supplier of
grain, which he obtained mainly by bartering aluminum from smelters in the
former Soviet Union. (Stuart Penson, "Marc Rich & Co. name changed for
'morale,’" American Metal Market, Sept. 2, 1994)
As Rich’s inference transferred to the Glencore group, then faded in the
mid-1990s, two brothers in London filled the gap. David and Simon Reuben
founded Trans-World Group (a/k/a Trans-World Metals) in 1977. After the
disintegration of the Soviet Union, Trans-World forged an alliance with
another set of brothers, Lev and Mikhail Chernyi (also spelled Chernoi and
Chernoy), whose Moscow-based Trans-Seas Commodities came to control Russian
aluminum exports.
The Chernyi brothers, said Minister Davydov, "gained control of aluminum
exports at a time when aluminum cost $ 2,000/ton on world markets but could
be bought at $ 500/ton
inside Russia. All the producers became deeply indebted to the brothers,
who made deals with the plant directors to acquire aluminum at the Russian
price. Which they then sold at the world price. The tragedy is that if the
privatized companies were state enterprises today, they would be recording
good profits, they would be paying taxes, paying workers' wages, investing
in their plant and equipment. But these so-called owners arrived, and what
happened? There are no profits. No tax payments. The plant and equipment
are getting worn out. And the money goes abroad." (Forbes, Sept. 7, 1998)
In 1995, Trans World took control over the Gyndzha alumina plant and
Sumgait aluminum plant in Azerbaijan from Glencore. The shifting business
climate brought this thought from a Glencore executive, according to
BizEkon News: "One of Glencore Moscow office executives recently pulled no
punches in contending that his company would still be doing deals in Russia
even if a Hitler or someone came to rule it, given Glencore's prodigious
track record of business collaboration with regimes of any stripes and
shades. (Kirill Vishnepolsky, "Glencore International Strikes Root in
Russia," RusData DiaLine - BizEkon News, April 30, 1996)
By early 1998, Trans World controlled between 40% and 70% of Russia’s
aluminum industry. Its estimated global sales of $6 billion per year made
the small firm, fleetingly, the third largest aluminum company in the
world. Then, the Chernyi brothers severed ties with their London partners.
By 2001, Trans World had exited from most of its business in the former
Soviet Union. (Matthew Brzezinski, "Kiev’s dreary hotels offer microcosm of
reform failures," Wall Street Journal, April 16, 1998; American Metal
Market, Jan. 19, 2001)
As Trans World faded, other so-called "aluminum barons" rose, including
politicians Anatoly Bykov and his Krasnoyarsk Enterprise and Anatoly
Chubais and his Russian Joint (or Unified) Energy Systems. (Mining Annual
Review, March 2000)
Other players in Russia’s newly-privatized aluminum industry included Trans
CIS Commodities, Renova, Rial, Al-Invest, Mikom, AIOC, Hunter Douglas,
Metall-Gesellshaft, Pechiney, Gerald Trade, and Daewoo. (Delovoy Mir, April
13, 1995)
The aluminum industry remained a collection of feudal-like enterprises
until the late 1990s, when Siberian Aluminium (Sibersky) began to battle
the Chernyis, and seized control of many smelters.
The battle for control of the former CIS’ aluminum industry took many
forms. Government officials began accusing Trans-World of misconduct
beginning in 1997, when Russian officials investigated allegations that
Trans-World Metals defrauded the central bank and sponsored violence.
Russian Interior Minister Anatolii Kulikov raised the specter of "the
current criminal situation in the non-ferrous industry" when he told the
country’s Parliament about the need to curb western corporations’
influence. He said gang leaders controlled the Krasnoyarsk and Bratsk
smelters. (Mining Journal, June 5, 1998; "Russia Mining," Cambridge
International Forecasts Country Report, December 1, 1999)
Also during 1997, Russian officials alleged that the general director of
the world’s second-largest smelter, the 749,000 ton Krasnoyarsk smelter,
failed to repatriate $20 million from an alumina deal. (Mining Journal,
June 5, 1998)
In 1998, the government of Kazakstan ousted Trans-World from its management
position at the 1.1 million ton Pavlodar alumina refinery, accusing the
company of "irregularities, tax evasion and failing to act in the best
interests of shareholders."
As the charges intensified, Trans-World reportedly offered to sell some of
its interests to transnational giant Billiton. (Mining Journal, June 5,
1998)
Violence has ripped at the region’s aluminum industry. In Tajikistan,
government and rebel forces based in Uzbekistan have battled for control
over the Taduz smelter, one of the world’s largest. (see Human Rights
chapter). In Russia, explosives blew outside the Bogoslovsk smelter’s
administrative offices in September 1997. An official called it "an act of
routine revenge." (Mining Journal, June 5, 1998)
"The 1994-1998 period in the Krasnoyarsk region has been dubbed the "Great
Patriotic Aluminium War", in which local mafia and factory directors were
sucked into a bloody battle for control of the smelter," reported the
Financial Times in 2000. "Dozens died in a series of murders, including
local bankers, crime bosses and factory officials. The victims included
both allies and competitors of Trans-World, though David (Reuben) angrily
denies any hint that they or their partners had any role in the violence.
‘There is absolutely no truth to any of the allegations that Trans-World
has been involved in any illegal activity in Russia,’ he says. (Charles
Clover and William Hall, "Aluminium ‘risk-taker’ changes tack in Russia,"
Financial Times, April 12, 2000)
Russian authorities invaded the offices of Bykov and Krasnoyarsk in April
1999. In court, they accused Bykov of "laundering money obtained by illegal
means." (Mining Annual Review, March 2000)
In June 1999, Bykov, Chernoy/Trans-World, and Visaly Anisimov’s
TrustConsult fought for control over the Kransoyarsk smelter. While Bykov
faced prosecution from Russia, Chernyi had his own troubles. According to
the Mining Annual Review, "Swiss, US and British police were also
reportedly investigating Lev Chernoy over money laundering and organized
crime activities."
In the winter of 1999-2000, oil magnate Roman Abramovich led a group that
took control of the two largest smelters in the world: the 870,000 ton
Bratsk and 835,000 ton Krasnoyarsk plants. He bought the controlling shares
from Chernoy and Trans-World. (Mining Annual Review March 2000)
That season, car dealer Boris Berezovsky reportedly purchased the fifth
largest smelter in the country, the 284,000 ton Novokuznesk plant.
(Mikhailov; Mining Annual Review, March 2000)
At the same time, Sibirsky Aluminum, led by Oleg Deripaska, built a holding
company around the 400,000 ton per year Sayan aluminum smelter. Reynolds
(now part of Alcoa) has held a 3% stake in Sibersky.
Berezovsky and Abramovich formed an alliance that, within a month, absorbed
Deripaska’s Sibirsky Aluminum. The new umbrella group, named Russian
Aluminum (or Russky Aluminum) dominates the country’s industry. Its five
smelters, with a combined capacity of over 2.1 million tons of production,
generate annual sales of $3.4 billion, according to the U.S. Department of
Commerce. (Mikhailov)
A Russian newspaper tied the buyout to a power struggle between the
aluminum barons and politicos Chubais and Vladamir Putin. "These purposeful
and even aggressive aluminum market deals indicate that Berezovsky,
Abramovich and Chernyi have gone on the attack: they have united in order
to concentrate the ownership of vast strategically-significant assets. They
are doing this in order to kill several birds with one stone," claimed the
Moskovskie Vedomosti in February 2000.
"Firstly, they want to diminish the influence on the GDP of groups
controlled by their main opponent, Chubais; thus also reducing his chances
of heading the government or
getting one of his people into that post. Secondly, they want to control
the aluminum sector as well as the oil sector, which would give them
influence over the fundamental natural resources sectors of the Russian
economy. Thirdly, of course, it's a question of personal security.
"Having despaired of reaching an agreement with the acting president now,
and fearing that after the election Putin will initiate a new
redistribution of property, Berezovsky, Abramovich, and the Chernyi
brothers want guarantees of their own security and the security of their
business interests. They figure that Putin will have no choice; he will be
forced to provide guarantees (and concessions) for a single favor: he will
not have to sit down at the negotiation table with several odious
oligarchs, as Boris Yeltsin once had to do. Neither would this be
acceptable to Putin himself; the head of state is unlikely to meet with the
Trans-World Group boss, who has a very shady reputation. Berezovsky would
be a different matter - he is, after all, a member of parliament...
Basically, this is blackmail. Ordinary, blatant blackmail. They are showing
Putin that they aren't afraid of him." ("Behind the aluminum deal,"
Moskovskie Vedomosti, February 2000)
Russian Aluminum wants to grow transnationally, particularly into
infrastructure developed by the former USSR. Its targets included the
refineries in Ukraine, Kazakhstan and Romania, and coal mines in Ukraine
and Kazakhstan. (Mikhailov)
Two other large holding companies, SUAL-Trustconsult and NorthWest
Aluminum, were forged out of the on-going industry-wide restructuring in
2000.
SUAL-Transconsult is the product of a three-way merger, in early 2000,
between the Siberian-Urals Aluminum Company, TrustConsult, and Renova. The
new combine owns three bauxite mining companies and four smelters including
the 158,000 ton Bogoslovsk, 252,000 ton Irkutsk, 80,000 ton Urals, and
68,000 ton Kandalaksha plants. (Mikhailov)
NorthWest Aluminum is a holding company proposed by eight aluminum
companies in the Leningrad region. The nascent firm includes the 24,000 ton
Volkhov and 129,000 ton Volgograd aluminum plants and two alumina producers
(Boksitogorsk Alumina and Pikalyobskoye Alumina). Alutech of the U.S. hopes
to set up a 200,000 ton smelter in the region. (Mikhailov)
A recent Dept. of Commerce report said the reorganization held promise for
more Western equipment sales, but added that "the circumstances surrounding
these mergers were highly non-transparent and the identity, objectives and
financial structure of the new management is not sufficiently clear to
reach a judgment about their plans for the new conglomerate." (Mikhailov)
U.S. companies supply about one-quarter of the equipment imported by the
Russian aluminum industry. Suppliers include Alcoa, Alutec, Kaiser (two
potroom cell upgrades to Krasnoyarsk), Loma Machine Mfg., Pyrotec Inc. and
Wagstaff Inc. According to the U.S. Dept. of Commerce, "the most
aggressive non-American players in the Russian aluminum equipment market"
are: Germany’s Mannesmann, Schloemann, Wagner, and VAW (designed an upgrade
at Novokuznetsk); France’s Pechiney and Clecim; Italy’s Hunter Midia,
Continuus Properzi, and Mino; Britain’s Megatherm and JMC; Japan’s Itochu
and Mitsubishi Heavy Industry (they want to finance an expansion at Sayan);
and, Austria’s Ebner. (Mikhailov)
- Still in turmoil
The aluminum industry in Russia remains tumultuous after the
consolidations. Men who shaped the post-Soviet industry have been charged
with murder, money laundering, and collusion with the Mafia.
On Oct. 4, 2000, Agence France Presse reported that Russian police arrested
Bykov, "once known as Russia's ‘aluminum baron,’ in the Siberian city of
Krasnoyarsk on Wednesday while investigating the murder of a local
underworld figure... Bykov is accused of several crimes, including fraud,
money laundering and being implicated in another murder. Bykov was arrested
at his home Wednesday on suspicion of involvement in the September 29
murder in Moscow of Pavel Struganov... Struganov, suspected of being a
leading figure in Krasnoyarsk criminal circles, was killed along with
another man in broad daylight in central Moscow." ("Russia's former
‘Aluminum baron’ returns to prison, Agence France Presse, Oct. 4, 2000)
Earlier in the year, Bykov was extradited from Hungary to face the other
charges, and was released on bail in September. ("Two businessmen killed in
central Moscow," Agence France Presse, Sept. 29, 2000)
An April 25, 2000, article in Noviye Izvestia asked, ". Who is he, Anatoly
Bykov: the godfather of the aluminum mafia, or just another victim of
political showdowns and property redistribution? And most importantly, what
will happen when Bykov starts talking? His testimony is expected to be a
real blow to many people in high places: Anatoly Bykov's personal friends
and enemies, partners and competitors include quite a few politicians in
the top echelon of power, as well as important government officials,
businessmen, financiers and even officials of various security and
law-enforcement agencies. Hence the speculations that there will be an
attempt to get Bykov "out of the way" now that he's back in Russia. If that
is really so, we can expect surprises not so much from his enemies as from
his "friends," since Bykov undoubtedly has suitcases full of "exclusive
dirt" on them. The criminal world, which lives by its own laws, also has
grievances against Anatoly Bykov.
"Here's a quotation from a letter to him from crime kingpin Vladimir
Tatarenkov, a.k.a. the Tatar, who was recently arrested in Greece and is
now giving testimony in a Russian prison: ‘Dear Anatoly Petrovich! I have
recorded numerous videocassettes telling about the way you have been living
for the past few years, and about how much blood was shed so that you could
become what you are now. Don't you have nightmares about the people who
died at your orders, though not by your hand? . . . The people who elected
you would be awfully surprised to find out who they voted for. Russia has
never been fond
of murderers.’" (Yevgeny Latyshev, "Who has an interest in seeing Bykov
eliminated?," Noviye Izvestia, April 25, 2000)
In Dec. 2000, two trading companies, Base Metal Trading of Switzerland and
Alucoal of Cyprus, filed a $2.7 billion suit in U.S. District Court against
Russian Aluminum, Sibersky Aluminum, Deripaska, and Mikhail Chernyi.. The
companies claimed that the Russian aluminum giants "joined with the
Izmailovo Mafia to illegally monopolize the metals market left vulnerable
after the collapse of the Soviet Union. They allege abuses that violate
Racketeer Influenced and Corrupt Organizations Act, and they claim to have
suffered $ 900 million in losses," according to the National Law Journal.
("3-nation aluminum suit," National Law Journal, Jan. 8, 2001)
"The complaint enumerates specific allegations of murder, extortion, and
mail and wire fraud, among other criminal acts allegedly orchestrated by
the defendants and carried out in some instances by the
Izmallovo-Russian-American mafia," reported Mining Journal. "The core of
the claim is that, when the defendants were unable to negotiate a legal
purchase of NKAZ, they resorted to extortion to seize control of the
smelter and a greater portion of its trading profits. Amongst other
tactics, the complaint says that the defendants enlisted the assistance of
government and judicial officials in pursuing and winning falsified
bankruptcy proceedings" ("Russian Aluminium named in RICO suit," Mining
Journal, Dec. 22, 2000)
"Criminal elements have besieged Russian industry with illegal payoffs,
threats and acts of violence. This case will demonstrate how U.S. financial
institutions are used by criminal, elements to accomplish their purposes.
U.S. courts have the power and opportunity to prevent Russian oligarchs
from using the U.S. banking and commercial systems to facilitate criminal
conduct in other countries," claimed the plaintiffs’ attorney, Robert
Abrams. (Base Metal Trading: Russia's Largest Aluminum Company Named in
US$2.7 Billion RICO Suit," Canadian Corporate Newswire, Dec. 20, 2000)
***** SIDEBAR ******
Forbes on Trans World
The Reuben brothers spoke to Fortune magazine in late 1999. As the Reubens’
Trans World aluminum empire collapsed, Fortune reported on the rise and
fall. The following are excerpts from the Richard Behar’s June 12, 2000,
article headlined "Capitalism in a Cold Climate: The story of Trans World's
aluminum empire is filled with bribes, shell companies, profiteers, and
more than a few corpses. Then again, in today's Russia, that's pretty much
par for the course."
"’Very often the most likely to succeed in these stormy oceans are not the
picture-perfect, clean-shaved, deep-tanned, well-built, and fashionably
attired yachtsmen under the immaculate white sails,’ says Lev Chernoy,
reading from a prepared statement, ‘but unpleasant-looking ugly skippers in
command of a pirate ship. One should not be appalled. These are the laws of
initial capital acquisition’...
"This is the story of how those laws were applied by Trans World, an
enterprise launched by the Reuben brothers, David of London and Simon of
Monaco, in the early 1990s. With the help of two Russians--Lev Chernoy and
his brother Michael--the Reubens built a Rockefeller-style vertical empire
in the former Soviet Union in a few short years. In 1996, Trans World was
hailed as the world's third-largest producer of aluminum, after Alcoa and
Alcan...
.
"Trans World's scope was so vast yet so invisible that it was called ‘a
state within a state,’ with hundreds of constantly shifting shell companies
and tentacles reaching from the Siberian steppe to the shores of Cyprus,
the Bahamas, the Cayman Islands, and ultimately
the U.S., where 30% of the empire's aluminum was sold...
"The Reubens' time in the sun was brief. By 1998 they had lost control of
nearly half their kingdom to former partners. Government investigations in
at least seven nations--along with hundreds of mostly foreign media stories
critical of Trans World--were threatening to take away the rest. Cutting
their losses, the Reubens sold most of their remaining Russian assets a few
months ago....
"In the course of nearly 100 hours of interviews, the Reubens and the
Chernoys contradicted one another so often as to be nearly unintelligible.
Ironically, their attempt at
glasnost, while it generated no smoking gun, has ultimately only
underscored the dirtiness of the world they moved in--and will likely spur
law enforcement agencies to redouble efforts to finish them off. At least
that's FORTUNE's conclusion, especially after our investigation traced
large sums moving from Trans World to firms at the heart of three big
money-laundering scandals that have dominated headlines in recent months:
the Bank of New York case, the Kremlin-Mabetex kickback probe, and the
collapse of YBM Magnex, a Pennsylvania public company launched by Russian
mobsters that was shut down by the feds last year."
The full, lengthy investigative piece on Trans World and the Chernoys can
be found in the June 12, 2000 edition of Fortune magazine.
- Foreign aid and investment in the former USSR
The U.S. Trade and Development Agency was an early backer of foreign
investment in the former Soviet Union’s aluminum infrastructure. In 1994,
the agency gave aluminum industry officials from the former Soviet Union
$24,000 to spend on a visit to the Alumitech 94 convention in Atlanta.
(TDA)
Since then, foreign government bank financing has been proposed or extended
toward many operations in which the aluminum barons have operated.
- Armenia
In 1988, the French government pledged 1 billion francs in financing toward
the modernization and expansion of the 100,000 tpy Kanaker aluminum smelter
in Armenia by the French firm Pechiney. The venture would have given
Pechiney 25% ownership of the plant. The break-up of the Soviet Union, war
in Armenia, and severe pollution caused by the smelter, however, have
conspired to keep it closed in the 1990s. (Ecotass, November 20, 1989;
Financial Times, November 25, 1988; Chemical Business News Base,
January 12, 1989)
- Azerbaijan
A smelter in Sumgait has helped that city obtain the dubious status of "one
of the most polluted cities" in the former Soviet Union. (Mining Journal,
November 14, 1997) "Row upon row of tiny headstones in a children’s
cemetery bear silent testimony to the pollution that has poisoned the
sprawling industrial town of Sumgait, reported Agence
France-Presse last year. (AFP, June 16, 1997) At its operational peak in
the 1980s, a local documentary charged, the Sumgait refinery "poisons
Sumgait’s air basin with 70,000 tons of toxic discharges each year."
(Soviet television, May 11, 1989)
Trans-World Group assumed management of the smelter and an associated
alumina refinery (Gyndzha Alumina) in 1997. Previously, Kaiser (U.S.) and
Interchem (U.K.) planned to invest in the plant, with possible backing from
the EBRD, but backed out in 1996, when they determined that high energy
costs would make their investment unprofitable. (Euromoney Trade Finance
and Banker International, July 31, 1995; Reuter, June 21, 1995)
In April 2000, the Azeri government created the Azerbaijan Aluminum holding
company, which included the Gyndzha alumina plant and Sumgait and Zeiliksky
aluminum plants. In October, it selected Netherlands-based Fondal Metals
over Russian Aluminum and an offshore company named Ansol in bids to
develop the aluminum company. Two other bidders -- Iralco of Iran and
Trans-World -- withdrew their bids, according to Azer-Press.
According to Kommersant, officials of Russian Aluminum and Dutch producer
Hoogovens had never heard about Fondal Metal. "There are two main
versions," reported the newspaper. "First: Fondal Metal represents
interests of British Trans World Group, which used to manage the Gyandzha
alumina plant until 1997. Second: MetallsRussia concern, a metal trading
subdivision of Thai group Sahaviria, is behind Fondal Metal. The group has
substantial industrial assets in Ukraine." ("Azerbaidjan aluminum will
become Dutch" by D.Butrin, Kommersant, October 13, 2000)
- Kazakstan
Trans-World Metals was active in Kazakhstan until it was ousted in 1998. In
1996 and 1997, Trans-World planned to build a 200,000 ton smelter there,
and had Bechtel produce a feasibility study for the smelter’s construction.
According to the Russian news agency Interfax, in 1997 the EBRD was
considering helping to finance a proposed aluminum smelter in Kazakstan,
along with Bechtel, Intec and Alumax. A spokesman said the companies were
attracted by Kazakstan’s cheap electricity, alumina and labor. (Interfax
news agency, Sept. 29, 1997)
,
In December 1997, according to Mining Journal (June 5, 1998), Trans-World
Metals "filed a lawsuit against three of that country’s citizens for
allegedly trying to subvert its operations there, including Pavlodar [an
alumina refinery]. In January 1998, the government ousted all T-WM
appointed management from its metals plants, accusing them of
rregulatiries, tax evasion and failing to act in the best interests of
shareholders."
The Energy and Aluminum newsletter reported in 1998 that "although
Trans-World Group said last June that it would build Kazakhstan's first
smelter, late last year Trans-World lost control over its investments in
northern Kazakhstan, including the Pavlodar alumina plant that was to
supply the smelter with raw material.... The future of Trans-World and of
this project remains questionable. The current situation is somewhat
confusing." (http://www.enalnewsletter.com/enalnl07.htm)
- Russia
Russia is the world’s largest exporter of primary aluminum, and the second
largest producer (3.15 million tons in 1999) after the United States.
(Mikhailov)
In 1997, according to Euromoney, Trans-World sought to raise funds for
smelter
upgrades in Russia from "multilaterals such as the EBRD… although the bank
has to date kept a distance from the Russian aluminum industries."
In 1994, the EBRD and Scandanavian financial institutions, including
Finland, were "expected" to grant credits toward the overhaul of the
Kandalaksh aluminum plant in northern Russia, although no such deal appears
to have been finalized. The bank also has considered financing the
Novokuznetsk smelter (CIS Economics & Foreign Trade, June 14, 1994;
Euromoney, April 30, 1997)
The U.S. Trade and Development Agency (TDA) has financed studies at two
smelters. It paid $850,000 toward a study by I.S. Consulting on
modernization at the Bratsk smelter, and $500,000 toward an Alumax (now
Alcoa) study of the Volgograd smelter. (U.S. Trade and Development Agency
(TDA) website, http://www.tda.gov/region/nis.html)
In Leningrad Oblast, the U.S. consulting firm Alutec is negotiating with
the government to build a planned aluminum smelter that would draw power
from the Leningrad Nuclear Power Station. The $650 million, 220,000 ton
plant, would be located close to the Gulf of Finland, in easy reach of
Western markets.
"Because of its location and cheap power, the Leningrad Oblast is a very
advantageous spot for aluminum production," Grigori Dvas, Oblast deputy
governor in charge of industry and economic policy, told the St. Petersburg
Times in 2000. "And even if Alutec doesn't go ahead with its project, we
will find other investors." (John Varoli, "Aluminum Interest Considering
Oblast," St. Petersburg Times, Sept. 26, 2000)
Alutec said it would collaborate with unnamed large transnational
producers, and possibly the World Bank, International Finance Corp., and
EBRD, for financing the new smelter.
"How Alutec will find its niche among these giants is not clear, and
certainly a task filled with great risk, if not danger," reported the St.
Petersburg Times. "Indeed, Alutec understands it will have to cultivate the
good will of Russia's oligarchs and aluminum kings -- the likes of Roman
Abramovich and Oleg Deripaski -- if its project is to succeed." (ibid)
- Tajikistan
The Tajikistan government is planning to privatize the plant to meet
conditions set by the International Monetary Fund. The plant imports
alumina from Russia’s Russky Aluminy and ships ingot to Russia. (Bakhtior
Islamov, "Aral Sea Catastrophe: Case for National, Regional and
International Cooperation," Slavic Research Center, 1998; also,
Globalsilicon news at www.globalsilicon.com/english/e12.htm)
In 1997, the EBRD opened talks with corporations interested in taking
shares in the Taduz smelter, according to the Energy and Aluminum
newsletter. (www.enalnewsletter.com/enalnl06.htm)
In 1999, the International Finance Corporation and the government of
Switzerland provided $400,000 toward an international audit of the smelter.
According to the IFC, the assessment "identifies viable privatization
options for the company." ("Tadaz: Production of aluminum must increase to
300,000 tons by 2000, Asia Pulse, June 14, 1999; International Finance
Corp., "Annex: TA Projects Approved for Support by Donors in FY99," in IFC
1999 annual report)
According to Radio Free Europe, Turkey’s EximBank is considering an $8
million loan to the Tursunzade Aluminum Plant. ("Tajikistan, Turkey seek to
expand economic ties," Radio Free Europe/Radio Liberty Newsline, Sept. 27,
2000)
Sayan, now part of Russian Aluminum, has also been interested in investing
in Tadaz. (www.enalnewsletter.com/enalnl07.htm)
In 1999, TDA paid $450,000 toward a Bechtel Corp. feasibility study of a
possible new 165,000 ton, $575 million smelter at Mery, Turkmenistan. (TDA;
Mining Annual Review, March, 2000; WWP-Business Opportunities in Eastern
Europe & the CIS, Dec. 8, 1999)
- Ukraine
In Ukraine, the U.S. TDA paid $500,000 toward a Technalum study of the
Zaporozhye smelter, and $240,900 toward a Kaiser study of the ZALK smelter.
(TDA)
Other intertwining of banks and aluminum
- Argentina
Aluar (Argentina) installed a new 120MW gas-fired power plant as part of a
program to expand its aluminum production capacity from 175,000 to 258,000
tons by 1999. (Aluminium Today, April 1997; Reuters, Dec. 24, 1996)
Existing infrastructure includes a 448MW plant in Fataleufu, southern
Patagonia, and a reserve 54MW thermal plant imported from Italy. During the
smelter’s construction, company officials noted the "great advantage
involved in cheap electric power to be generated by the State," which was
four-tenths of one center per kilowatt in 1975. In 1971, the Argentine
government requested$80 million in credit from the Inter-American
Development Bank to build the $90 million dam. (Latin America Newsletter,
Aug. 20, 1971; May 3, 1974).
- Brazil
The World Bank helped to finance the construction of the massive Tucurui
dam, which fueled the proliferation of aluminum infrastructure in Amazonia.
(See Energy chapter for more details) (Latin American
Newsletters, Nov. 23, 1984)
The Japan Export-Import Bank financed the development of a second set of
transmission lines from the Tucurui hydroelectric dam to the Albras 340,000
tpy smelter at the mouth of the Amazon River, at a cost of $130 million.
Albras is 49% owned by a consortium of Japanese corporations, including
Showa Denko, Kobe Steel, Marubeni and Sumitomo, which import the plant’s
aluminum.
The Tucurui dam also supplies energy to the 350,000 tpy Alumar smelter,
which is 60% owned by Alcoa and 40% by Shell. Tucurui produces 3,000 MW of
power, with 1,400 MW dedicated to supply Albras, Alumar, and the 1.1
million tpy Alunorte alumina refinery. The companies are considering
participation in a $1.8 billion, 900MW
expansion of Tucurui’s capacity to 6,000 MW. Alumar is the largest private
aluminum project. (Gazeta Mercantil Online, October 22, 1996, Nov. 21,
1996; American Metal Market, July 25, 1996; Financial Times, Nov. 16, 1996)
- Cameroon
The 90,000 tpy Soderburg technology-driven Alucam smelter in Cameroon is
majority owned by Pechiney of France. In 1987, the French government aid
agency, Caisse Centrale de Cooperation Economique, loaned Alucam $1.4
million toward the purchase of new equipment. At least three other
multilateral loans have benefitted Pechiney’s Alucam smelter: In 1985, the
European Investment Bank loaned Cameroon $21.2 million, and the government
of Kuwait’s Development fund loaned 3 billion CFA francs for the Song
Loulou power station which helps to power the Alucam smelter and in 1986,
the CCCE
loaned Cameroon $12.2 million for installing two 48MW turbines at the dam.
(African Economic Digest, July 12, 1986; Oct. 30, 1987, Feb. 8, 1986)
In 1979, the International Finance Corp. committed $7.9 million toward
Alucam. Twenty years later, the IFC still held equity of $0.9 million in
the aluminum smelter. (IFC annual report 1999)
- China
International finance has keyed the surge in aluminum production in China,
where aluminum production grew by 9.7 percent from 1998 to 1999, reaching a
record total of 2.6 million tons. Most Chinese smelters are small-scale.
The largest, Guizhou, produced 227,000 tons in 1999. The other four largest
smelters are Qinghai (205,000 tons in 1999), Baotou (117,000), Pingguo
(110,000), and Qingtonxia (102,000). More than 90 other smelters produce
less than 100,000 tons. Expansion projects are planned at Baotou (105,000
ton additional capacity by 2002), Pingguo (200,000 ton possible expansion),
Qingtongxia (100,000 ton expansion planned for 2001), and 12 other
smelters. (Mining Annual Review, March 2000)
IFC and OPIC have been, or may become, involved in a smelter projects in
Heijin City, Guangxi Pingguo, and an electrode paste plant that supplies
Chinese aluminum smelters.
In June 2000, the IFC agreed to invest $14 million in a Soderberg paste
plant, owned by Elkem of Norway, in the northwestern China region of
Ningxia. Elkem bought the shuttered plant from the state in April 2000. The
Elkem Carbon China plant supplies paste and anthracite to the aluminum and
ferroalloy industries. The IFC described this new plant as "the largest
single foreign investment to date in Ningxia." The Norwegian government
financed an environmental assessment of the Elkem project. Even though the
plant produces a paste for an antequated technology (Soderberg smelting),
the IFC called the project "an example for the industry through the use of
modern, efficient, less-polluting technology." (International Finance
Corp., "IFC invests US$14 million to develop China’s Northwestern Region,"
press release, June 7, 2000; "IFC invests US$14 million in western China,"
China Online, at
www.chinaonline.com/industry/chemicals/NewsArchive/Secure/2000/June/B1000613
12.asp))
Alcan (Canada) has reached a memorandum of understanding with the Chinese
government’s China Non-Ferrous Metals Industry Corp. to build a new 240,000
tpy smelter in Heijin City, Shanxi province, with possible expansion to
400,000 tpy. A feasibility study was due to be completed by mid-1999.
(ESP-Business Opportunities in Asia & the Pacific, Jan. 1, 1998) It would
be one of Alcan’s largest smelters and would have a captive coal-fired
power plant. IFC and OPIC involvement is possible. (Aluminium Today, June
1997; China Economic Review, Dec. 1995)
The governments of Denmark, France, Netherlands and Sweden, in 1991,
extended loans totaling $90 million to supply equipment to the new 300,000
tpy Guangxi Pingguo aluminum smelter. According to the Mining Journal (Oct.
4, 1991), the loans funded the importation of alumina refining equipment
from French firms Pechiney, Kestner and KHD ($63 million), power plant
equipment from ABB ($10.5 million), alumina pumping technology from the
Dutch Geho Pump Corp. ($7.7 milion), and an alumina sintering furnace from
F.L. Smidth of Denmark ($4.7 million).
- Egypt:
In 1988, Alcoa considered buying "a substantial stake in Egyptalum," a
180,000 tpy smelter, according to Middle East Economic Digest (July 10,
1998). Egyptalum is planning to boost output by 120,000 tpy, and convert
its existing Soderburg anodes to pre-baked cells. In 1995, the European
Union-funded European Investment Bank loaned $92 million toward
modernization at Egyptalum. (African Economic Digest, Nov. 6, 1996)
- Costa Rica
In 1971, Costa Rica President Jose Figueres signed a pact with Alcoa, the
World Bank, and the Soviet Union "to construct a $400 million alumina
refinery and hydroelectric generating plant in the northwestern province of
Guanacaste. Electrical power from the new dam was to be transmitted to the
Alcoa mining site. In exchange for purchasing Costa Rica's excess coffee,
Soviet hydroelectric generating equipment was to be purchased for the
500,000 kw dam. The combination of public opposition to Soviet involvement
and ALCOA's decision to cease bauxite mining due to poor ore quality caused
the negotiations to fail," according to the National Congress of American
Indians.
"Through the World Council of Indigenous Peoples the Boruca people became
informed about the experience of Indians in Surinam, the aboriginals in
Australia and the Yanomamo of Brazil as they confronted similar bank and
state initiated development projects. It was the discovery that
Multilateral Development Banks, state government economic pressures and
multinational corporations had combined to promote developments in
territories of least political resistance that caused the Boruca people to
increase their resistance to the planned Boruca Dam and the aluminum
processing plant. Indeed, the Boruca people sought to expose the actual
intent of the Multilateral Development Bank, the aluminum industry and the
Costa Rican government to the
national citizens of Costa Rica in an effort to prevent the further
advancement of the project.
"What had been revealed by the Borucas was that the Alcoa aluminum company
was interested in locating its processing facilities in Costa Rica because
of the increased political and military tensions in Surinam. The company
was not particularly interested in using Costa Rican labor, nor was it
interested in Costa Rican bauxite. Furthermore, it was revealed that the
actual beneficiaries of the planned Boruca project would be the
Multilateral Development Banks and private banks which would receive
interest payments on past Costa Rican loans; and the Alcoa company would
benefit from a "safe haven", low or nonexistent taxes and tariffs, low
labor costs and "free zone" ports from which to import and export raw and
processed bauxite and aluminum. And, of course, the aluminum industry would
be assured inexpensive electrical power." (Ralph Eluska, vice president of
the National Congress of American Indians, "Tribal populations and
international banking practices: a fundamental conflict over development
goals," Testimony before the House Banking Committee's Subcommittee on
International Development Institutions and Finance, June 29, 1983 at
www.cwis.org/fwdp/International/bankpoly.txt)
- Ghana
Sixty percent of the bauxite mined by the Ghana Bauxite Co. is exported to
Alcan’s alumina refinery in the U.K. The U.K.’s Commonwealth Development
Corporation loaned the GBC 3.1 million sterling to install a new conveyor,
completed in 1992, to haul load bauxite onto awaiting ships in Takoradi.
(Reuter, Sept. 23, 1994)
Bilateral and multilateral financial institutions have also financed the
development of energy consumed by the aluminum industry in Ghana. The Valco
aluminum smelter (90% owned by Kaiser) draws over about 45% of the power
generated by the Volta
River Authority’s Akosombo and Kpong dams. (Peter Owu, "Energy Crisis in
Ghana," Africtech, vol8, no.1, at African Technology Forum website:
web.mit.edu/afs/athena.mit.edu/activity/a/africantech/www/articles/GhanaCris
is.htm)
In 1961, OPIC and the World Bank financed the construction of the Akosombo
Dam on the Volta River. Valco, then the largest smelter in Africa, was
developed to consume power from Akosombo. This dam, according to the
International Rivers Network, "flooded more land than any other dam in the
world, 8,500 square kilometers, around four percent of the area of Ghana."
(International Rivers Network, "When the Rivers Run Dry - The World Bank,
Dams and the Quest for Reparations," at
www.irn.org/programs/finance/damfacts.html; OPIC, "OPIC in Ghana," March
1999, at www.opic.gov)
The IDA ($100 million), EIB ($45 million), African Development Bank, CDC
(U.K.) , CFD (France) and others have helped to construct a new Aboadse
power project and connections to the national grid. National power
shortages caused by drought and excessive demand forced Valco to curtail
production in the mid-1990s. (Africa Energy & Mining, Jan. 25, 1995, Dec.
21, 1994).
Eight bilateral and multilateral institutions provided over $300 million in
financing toward the development of the new Takorade oil-fired power plant,
built to provide more reliable power. Financing instittuions include the
IDA, EIB, CDC, Kuwait Fund for Arab Economic Development, Arab Bank for
Economic Development in Africa, African Development Bank, and the Caisse
Francaise de Developpement. This plant was seen as necessary to maintain
Valco’s presence in Ghana. (Owu)
OPIC has also provided insurance for Valco. ("OPIC in Ghana")
- Guinea
Numerous aid agencies have directly supported the mining of bauxite and
alumina refining in Guinea.
In 1992, the EIB extended an $18.5 million loan, and the CCCE a $20 million
loan to
financing a modernization project at the Friguia refinery, in which French
firm Pechiney, British Aluminium, Noranda, VAW (Germany), and Alusuisse
have a 51% controlling interest. Previously, the EIB loaned Friguia about
$5 million in 1980, $7 million in 1984, and $15 million in 1988. Also in
1988, the European Development Fund approved a $40 million loan toward
Friguia. (Euromoney Trade Finance Report, Jan. 1992; Africa Energy &
Mining, Feb. 22, 1995; Europe Energy, Nov. 6, 1992; European Report, Nov.
23, 1991; Mining Journal, Dec. 9, 1988; Mining Annual Review, June 1992)
In 1996, the World Bank’s IDA approved a $12.2 million credit toward the
privatization of Guinea’s mining sector. "The project objectives are to
strengthen the Government’s capacity to act as facilitator and regulator of
mining activities, and to attract private investment for mining sector
development," according to the agency. (World Bank Project Information
Document, "Guinea-Mining Sector Investment Promotion Project," PID:
GNPA1077, June 29, 1995)
In October 1997, the World Bank put the "privatization of the alumina firm
Friguia back on track," according to Africa Energy & Mining (Nov. 18, 1998)
The IMF has also played a big role in the restructuring of Guinea’s mining
operations, including bauxite, through a structural adjustment loan. In
1999, the IMF reported that "the government has decided to divest itself of
its mining companies and thus reduce its role as owner and operator in the
sector, while strengthening its role as regulator and intermediary....
Through privatization it is intending also to reduce its shareholding in
the aluminum company, Friguia, to a minority without veto power. Should the
privatization operation not succeed because of the absence of a credible
buyer, the government will resort to a private concession. The government
will continue its restructuring of the bauxite company, SBK, and is
committed to reducing its share of the company's capital to a minority. The
government will continue its efforts in connection with reducing operating
costs and strengthening the management of another bauxite company, CBG, and
will design a strategy for encouraging new private investment in the
bauxite and aluminum sectors in the Boké region which may include a share
in the CBG." (International Monetary Fund, "Guinea Enhanced Structural
Adjustment Facility
Policy Framework Paper, 1999-2001," December 8, 1999)
- Guyana
The U.S. Overseas Private Investment Corp. has insured bauxite mining by
Reynolds (U.S.) in Guyana to the tune of $14.5 million in the 1970s, and
$14 million in 1991. The U.K. CDC has also provided $6.5 million in funding
toward bauxite mining in Guyana. Most of Guyana’s bauxite is shipped to the
U.S. and the E.U.
The World Bank, European Investment Bank ($14 million), and the European
Union provided $20 million toward restructuring Guyana’s bauxite industry
in the early 1990s.
(American Metal Market, Dec., 1991; Chemical Business News Base, May 15,
1991; Inter Press Service, July 19, 1994; Caribbean News Agency, Oct. 19,
1993; Agence Europe, Feb. 20, 1993)
In 1991, the Guyanese government dissolved the state-owned Guymine
operation. Green Mining of the U.S., which strip-mined the Linden bauxite
reserve for Guymine, had held insurance from OPIC in 1989 and 1990, and
requested reimbursement for unpaid work. After Green Mining filed the
claims, OPIC suspended its coverage for U.S. projects in Guyana. On July
28, 2000, Green dropped its claims against OPIC, and its lawsuits against
the Guyana government, in exchange for payment. The settlement reopened
OPIC insurance operations in Guyana. ("OPIC Restores Support for American
Investments in Guyana," Guyana Monthly Update, August 2000; U.S. Embassy in
Guyana, "Investment Climate (Guyana)," 1995 Commercial Guide to Guyana,
U.S. Dept. of Commerce, August 21, 1996)
Guyana’s government is planning to privatize its two bauxite companies,
Berbice Mining Enterprises (Bermine) and Linden Mining Enterprise
(Linmine). The privatization would open 60% majority stakes to help fund
capital improvements at both facilities. (Plunkert, 2000) Reynolds, now
owned by Alcoa, holds a 50% stake in the Bermine operation, and purchased 2
million tons of bauxite from the enterprise in 2000. (Reynolds 10-K,
FY1999)
The IMF has imposed a $70 million structural adjustment program in Guyana
which has targeted nationalized companies. In November 2000, IMF’s
directors "encouraged the authorities to persevere with efforts to
restructure the remaining public enterprises, especially the modernization
of the sugar company, and welcomed their intention to privatize the bauxite
companies." (IMF, "IMF Concludes Article IV Consultation with Guyana,"
Public Information Notice No. 00/102, Nov. 30, 2000)
- India
Italy’s SACE (State Export Credit Guarantee Corp.) and Mediocredito
have financed $15 millionts toward Bharat Aluminium Co. (Balco)’s purchase
of equipment from FATA Group of Italy. The government of Norway funded a
study of Balco by Hydro Aluminum (Nor) in 1989. In 1984, the U.K. Export
Credit Guarantee Department guaranteed a 25 million pound loan toward the
purchase of four power generators by Balco. The four 67.5 MW units were
provided by GEC of the U.K. (Business Line, August 5, 1998; Mining Journal,
Feb. 17, 1989; Financial Times, July 31,
1984)
The export-oriented NALCO aluminum complex in Talcher-Angul, Orissa, was
built using Pechiney (France) technology, with financing from the French
government (1.05 billion francs). (Aluminium Today, May 1993). The U.S.
Trade and Development Agency recently granted Indalco funds to study the
doubling of production at its Hirakud, Orissa, aluminum plant. Kaiser will
conduct the study and "supply technology for the project,"
according to International Market Insights (March 30, 1998).
In 1995, the IFC approved $25 million in financing toward a coke and power
plant in Andhra Pradesh. The Rain Calcining coke plant in Visakhapatnam,
partially owned by U.S. transnationals Houston Industries Energy and
Applied Industrial Materials Corp., produces 250,000 tons of calcined
petroleum coke for the aluminum industry in India and elsewhere in Asia.
(IFC Annual Report FY1995; The Hindu (India), Feb. 25, 1997, Deutsche
Press-Agentur, Aug. 28, 1995; Ogrin Universal News Services Ltd., Aug. 28,
1995)
- Middle East
According to a Nov. 2000 report by Gulf Business Online, "both Bahrain and
the UAE (United Arab Emirates) have been proactive in encouraging more
downstream industries as a means of adding more value to their latent
industrial sector. The Bahrain Development Bank (BDB), Bahrain's Ministry
of Finance and National Economy, the Ministry of Oil and Industry and the
United Nations Industrial Development Organisation (UNIDO), have joined
hands to promote the budding aluminium industry in the Gulf region by
drafting product and financing strategy. A string of projects with joint
ventures and some buy-back arrangements are now in the pipeline." (Roger
Jacobson, "Future looks bright for the GCC aluminium industrry," Gulf
Business Online (Dubai), Nov. 9, 2000)
- Indonesia
In one of the most infamous boondoggles of bilateral aid, the Japanese
government loaned billions of dollars [CHECK] toward the development of the
225,000 ton Inalum smelter in North Sumatra, Indonesia. The Inalum smelter
is controlled by Nippon Asahan Aluminium Co., a consortium of 12 Japanese
companies (including Hitachi, Toshiba, and Mitsubishi) and the government’s
Overseas Cooperation Fund.
In 1992, the Los Angeles Times reported that ), "critics of the Asahan
project say it is a classic example of the kind of commercially oriented
foreign aid that serves the strategic interests of Japan, the donor, far
more than the recipients of official assistance. A potent symbol of skewed
priorities… is the nine-hole golf course carved out of the jungle in
Paritohan, built with aid money for Inalum employees and used most
enthusiastically by Japanese visitors and expatriate engineers. Profitable
or not at this end, Inalum provides a cheap and secure supply of aluminum
to the cartel of Japanese aluminum makers who invested in a majority stake
of the project, using low-interest Tokyo government financing.
"[A] pattern has emerged, analysts say: The bulk of the aid [to Asia] has
gone into large infrastructure projects that provide lucrative contracts
for Japanese construction firms and equipment supplier," the report added.
(Los Angeles Times, June 9, 1992)
See energy section for more details on this project.
- Oman
In May 1998, the Omani government signed a $250 million loan from the
Import-Export Bank of Japan to build a new port which will serve
petrochemical plants and an aluminum smelter planned in Sohar, according to
Agence France Presse (June 1, 1998) Dubal is pondering the construction of
a new $2.5 billion, 480,000 ton smelter in Oman. (Rasha Owais, "Dubal
studies Oman smelter project," Gulf News, April 10, 1999)
- Mozambique and Malawi
In the industry’s largest recent multilateral and bilateral bank financing
scheme, foreign institutions including the World Bank, European Investment
Bank, and national agencies have poured over $820 million into the new
Billiton/Mitsubishi smelter in Mozambique.
The smelter development is the largest-ever private investment project in
the country. Its projected cost of $1.3 billion almost equal’s Mozambique’s
Gross National Product. (Leon Pretorius, "Regional integration and
development in Southern Africa: A case study of the MOZAL Project and its
implications for workers," International Labour Resource and Information
Group, March 2000)
The Mozal consortium -- Billiton (47%), Mitsubishi (25%), South Africa’s
Industrial Development Corp. (24%), and the government of Mozambique (4%)
-- completed the 250,000 ton per year smelter in 2000. About $820 million
of the $1.34 billion in project costs are being financed by the foreign
multilateral and bilateral agencies, including World Bank’s IFC ($120
million in loans) and IDA, the European Investment Bank ($46 million), and
national agencies in the U.K. (Commonwealth Development Corp.), Germany
(DEG) , South Africa (Credit Guarantee Insurance Corp.), and France ($26
million from the Caisse Francaise de Developpement). (American Metal
Market, May 19, 1998; Mozal press release, "International Financing for
Mozal smelter concluded," Oct. 30, 1998, at www.mozal.com; International
Finance Corp., "Mozambique: Mozal Aluminum Company," at www.ifc.org;
European Investment Bank, "EIB financing for regional power project in
Southern Africa," press release, June 29, 1999)
The consortium is conducting a feasibility study for the possible doubling
of Mozal’s capacity. (Stephen Johnston, "Aluminium," Mining Annual Review,
March 2000)
The possible gutting of Mulanje Mountain in Malawi to supply bauxite for
Mozal also has multilateral bank ties. In the mid-1990s, a study financed
by the African Development Bank has uncovered the reserves at Mulanje. The
study, according to African Economic Digest (June 10, 1996) study indicated
that the project could produce 540,000 tons of bauxite a year… 200,000 tons
of alumina and 100,000 tons of aluminum. About $880 million is needed to
develop the project." (African Economic Digest, June 10, 1996).
(See Environment chapter for more details on Mulanje Mountain, the Human
Rights chapter for more on the worker rights at Mozal, and the Energy
chapter for more on the impact of Mozal’s energy consumption on the Zambezi
River delta)
- Venezuela
The IMF is encouraging the Venezuelan government to privatize its aluminum
industry. In 1998, IMF managing director Michel Camdessus met with
Venezualan officials and pushed "the privatization of companies in the
aluminum and electricity sector," according to an IMF release. (IMF news
brief No. 98/13, May 19, 1998)
- Vietnam
The Vietnamese government is seeking support from France’s Overseas
Development Agency to devleop a bauxite mine/refinery/smelter operation in
the Tan Rai District of Lam Dong Province. The government hopes to have the
complex producing one million tons of bauxite and 200,000 tons of aluminum
per year by 2003. The complex would be owned by a joint venture of the
government and Pechiney. ("Bauxite Joint Venture Approved," Dau Tu, April
22, 1999, www.mekongresearch.com/May1999energy.htm)
Pechiney is expected to complete a feasibility study on the $800 million
project in 2001. The Central Highlands (Taây Nguyeân) region of Vietnam
holds reserves of over 3.4 billion tons of bauxite. ("Industry Ministry has
seen the future, and it’s made of aluminium," Vietnam News Agency, March
22, 2000 at vietnamnews.vnagency.com.vn/2000-03/21/Stories/14.htm;
www.vneconomy.com.vn/en/ext_economic/bilateral/fra001.htm)
VI. Human rights
Focus:
Aluminum industrialization and repression in India's state of Orissa
(footnote: This updates part of a chapter in an Institute of Policy Studies
1998 report, "The World Bank's Juggernaut: The Coal-Fired Industrial
Colonization of India's State of Orissa.)
The Indian state of Orissa's vast bauxite reserves are among the world's
largest. More bauxite is mined here than in all but seven countries. The
state holds about 10 percent of global bauxite reserves. Coal and hydro
power provide cheap sources for existing and proposed smelters. Labor is
also inexpensive; thus, foreign corporations have rushed to proliferate
bauxite mining, alumina refining, and aluminum smelting in India.
("Canadian ambition for Indian bauxite," Mining Journal, March 12, 1999)
In the name of the "upliftment of backwards tribes" -- or perhaps just
corporate profits -- Orissa has entered the list of transnational
corporations' favorite sources of bauxite and alumina. In short time, the
aluminum industry's blasting, refining, smelting, and coal-fired power
operations already have created a legacy of forced removals of people from
their villages, ruined temples, destroyed forests, poisoned rivers, brittle
bones, and dirty air.
Orissa's early experiences with this industry have compelled many people to
campaign for a halt to bauxite mining and smelting. Protests have
surrounded the NALCO aluminum smelter in Angul, the Utkal bauxite/alumina
project, and several other new or planned bauxite mines and alumina
smelters.
Corporate investors and the state and national governments have ignored or
squashed the dissident voices. As Ranjit Dev Raj of Inter Press Service
reported in 1999, "Mining transnationals have found an easy way to grab
bauxite-laden land from 'adivasis' (aboriginals) in the mineral-rich state
of Orissa, eastern India - get them arrested on trumped up criminal
charges." (Ranjit Dev Raj, "Bauxite TNCs Grab Tribal Land With Impunity,"
Inter Press Service, June 2, 1999)
Orissa's cheap labor, energy, and land have provided companies like Alcan,
Pechiney, Alcoa, and Alusuisse with the potential to build the lowest-cost
bauxite mining and alumina refining operations in the world. This
export-oriented industry is heavily subsidized by the Indian government,
which is eager to move big industries into regions it has labeled as
"backward areas." India offers 100% export-oriented industries exemption
from paying income taxes. It also drops import tariffs for equipment used
in these plants.
Companies utilizing these loopholes defend them as a means to uplift the
poor. In 1993, for example, Alutec of the U.S. defended a proposed bauxite
mine and alumina refinery venture in a 1993 study. "The state of Orissa and
the Indian Government have a commitment to develop the backward districts
of Kalahandi and the adjoining regions. A project of this type will lead to
infrastructure development, creation of modern townships, schools, medical
facilities and direct employment to approximately 1,000 persons." (Alutec
Inc., "RPGE Alumina Refinery Project, State of Orissa: Desk Study for
United States Trade and Development Agency," September 1993.)
But these same plants are tearing at the social fabric of life in many
parts of Orissa, according to the growing number of people campaigning
against them. Opponents of the new mines, refineries and smelters are
trying to protect their history and their communities in order to secure
their future. They argue that while the industry is there, riches may flow
to some people in the region, but when the bauxite deposits are gone, the
modern townships, schools and hospitals will almost certainly disappear
with them. Only a legacy of environmental and social destruction will
remain.
According to Inter Press Service, "Far from protecting the 'adivasis' and
their land, as it is constitutionally and legally bound to do, the Orissa
state government has openly pitched in on behalf of the TNCs which see no
need to negotiate with the 'adivasis'." (IPS, June 2, 1999)
''So far we have only received threats from policemen, district officials
and goons hired by the companies,'' Bidu Lata Huika, convenor of the
Orissa Adivasi Manch (Orissa Aboriginals Forum) said in 1999. "'These
companies hire goons to demolish our homes and attack us and then file
criminal cases on the basis of which the police arrest us. In any case we
are not interested in the compensation offered by the bauxite companies -
we want to continue as farmers on this land which has sustained us for
centuries." (ibid)
One bauxite mining/alumina refining scheme, Utkal Alumina, has drawn
increasing fire from indigenous people and others in Orissa's Raigada
district. Hydro of Norway and Alcan of Canada hold 45 and 35 percent
shares in the project, respectively. Indian Aluminium Co. holds the
balance. Alcan owned a 55% stake in Indal at the end of 1999. The companies
plan to complete financing by the end of 2001 and start producing one
million tons per year of alumina by 2005. (Plunkert, 2000; Alcan 10-K,
FY1999) ]
The Utkal consortium asserted in 1995 that it is "totally committed towards
the socio-economic upliftment of a backward tribal area." Utkal opponents
claim that 3,500 people will lose their land. Hydro of Norway said that 500
to 700 people would have to move from 2,400 acres of land. ("Hydro of
Norway has problems with alumina plant," Dagens Naeringsliv, March 28,
1996)
Local peoples' efforts to halt the Utkal project date almost to its
inception in 1991. Their protests have intensified in recent years. In
August 1997, according to Norwegian NGO NorWatch, Kucheipadar villagers
"smashed a prototype house that Utkal had erected in the neighborhood to
show the people who will be forced to relocate what kind of houses they
would be offered." All of the villagers' cultivated land would be wiped out
by the Utkal development. (Morten Rønning, "The fight against Utkal is
coming to a head," NorWatch newsletter, No. 4, Feb. 1998)
NorWatch interviewed some of the people who were in the blockade. Lochma
Mahji, a 42 year old woman, told the NGO that after four days of blocking
the road, many of the villagers "went back to work on our fields, and the
village was almost empty. At four a.m. on January 5, the few of us who were
left in the village were told that a truck and four jeeps were on their
way, and that the police were removing the roadblock. I immediately went
there, and stood in front of it. Representatives of the local authorities
and the police were there. We asked, 'Why are you removing the roadblock?
If you remove it, we'll lose our land and our homes. The authority you have
doesn't come from the womb of our motherland. You have your authority from
us, and you're obliged to help us.'"
The police responded with violence, she said. "The police grabbed the other
women present by their hands and threw them down on the ground. I objected,
saying that one cannot take a woman's hand unless one is married to her.
The police used the butts of their rifles to push me back. I said, 'Are you
going to shoot me - are you going to kill me? I'm not scared. I stand for
what I fight for, and I'm willing to die for that.' The police gathered
around me and hit me three times on my legs with sticks. I collapsed and
fainted. At the same time the police attacked the others, and threw
tear-gas grenades. Seven police officers came over to me, tried to lift me
up, and said they wanted to help me get home...
They stabbed me with iron pipes to get me up. A police officer pulled at my
leg. I tried to stand up, and felt an excruciating pain in my legs when I
stretched them out. I kicked the police officer who held my leg in his
face. When I managed to get up, two police officers grabbed my hair and
pulled me over to the roadblock. I was dragged there practically on my
knees."
Mahji said 17 women, 6 children and 7 or 8 men were injured in the police
action. Afterwards, the villagers sent a notice to the chief of police.
"He immediately tore it apart, and said that if we stirred up more trouble,
they would kill us," she said.
A boy told NorWatch that at the blockade, "I was beaten by the police once.
I asked why they hit me, but they didn't answer. The roadblock is there
only to control representatives of the authorities and the company. It's
our land; that's why we put it up. We cut trees, carry rocks and stand
guard at the roadblock." (Rønning)
Krushna Saunta, an aboriginal landowner and social worker, said in 1999
that, ''I was held in jail for a week along with five others, beaten, and
then released on bail. Everybody in my village of Kucheipadar have been
arrested at one time or another." Saunta's Organization for Protection of
Nature's Wealth (Sampada Sangrakshan Parishad or PSSP) conducted a poll of
local villagers in November 1998. He said 96 percent people in the district
opposed the projects. (IPS, June 2, 1999)
A five-person team of members of the Council for Social Development visited
the region in 1999. ''We were told by officials at the highest level in
Bhubaneshwar, Orissa's capital that the government would not countenance
any opposition to Raigada's industrialization," said team member, D.
Bandhyopadhyay. According to IPS, the team members were told that the
government was determined to 'teach a lesson' to NGOs which they accused of
inciting and organizing tribals against land acquisition for the 'public
good.'" (IPS, June 2, 1999)
Four NGOs in the area have been threatened with bans against receiving
government funds. A member of one of those NGOs, Vidhya Das of Agragamee,
said "This is just colonialism in another garb but the people here are not
going to give up so easily - they have learnt from the mistakes of their
brethren. Mines and factories have reduced self-reliant, self respecting
aboriginal families to live like refugees in ill- planned rehabilitation
colonies - but most of them are still homeless." (IPS, June 2, 1999)
In June 1998, Agragamee and people from Kucheipadar set up another road
block. According to NorWatch, around 3 a.m. on June 16, 1998, "armed police
raided one of Agragamee's local offices, and an hour later they raided the
organization's main office. The operation has been described as very rough,
and some of the employees were beaten. Eight staff members were arrested,
and five of them were imprisoned for several days before they were released
on bail. The charges, which Agragamee strongly rejects, were use of
violence, rebellious behavior, and suspicion of incitement to riot against
the mining companies." (Tarjei Leer-Salvesen, "Armed police clears the way
for Utkal, NorWatch newsletter No. 14, July 1998)
The troubled Utkal project has drawn the attention of many in Norway, home
to the consortium's lead corporation, Norsk Hydro. In January 2000,
Minister of Foreign Affairs Knut Vollebæk met with Norsk Hydro and three
NGO representatives in Delhi to discuss the project. According to Norwegian
NGO NorWatch, during the meeting Norsk Hydro "allegedly admitted that the
dialogue with the affected local population is not as good as it should be,
and then claimed that the local population supports them. When they were
confronted with the fact that the company is taking some of the local
population to court, one of the company's representatives replied that
Norsk Hydro does not deal with violent groups." (Tarjei Leer-Salvesen,
"Utkal Alumina discussed at top political level," NorWatch newsletter, No.
2, 2000)
Conflict over the Utkal project continued in 2000. On February 13, more
than 5,000 people organized by the PSSP demonstrated outside the
consortium's office in Tikiri. They demanded the end of the project,
Utkal's aid program, and police harassment. The demonstrators also demanded
the return of land acquired by Utkal to rightful owners. (NorWatch
newsletter, No. 2, 2000)
In April, according to the Norwegian paper, Dagens Naeringsliv, "Two
thousand demonstrators armed with bamboo canes and bows and arrows
destroyed two wooden bridges and trampled down 50,000 cuttings that were
part of a forest planting project. The next day armed police made arrests.
On April 22, protesters built a barricade to stop contract workers from
traveling to the site of the proposed bauxite mine." ("More conflict over
Norsk Hydro's Utkal project," Dagens Naeringsliv, as reported by Chemical
Business Newsbase, June 19, 2000)
The struggle took an even more violent turn in December.
On Dec. 7, Hydro issued a press release asserting that "most of the
inhabitants in Utkal are in favor of the bauxite and alumina project.
Having adopted an attitude of wait-and-see for several years, the political
parties in the area have now gathered support for the project. It quoted
K.C. Mohapatra, leader of the All Parties Committee, as saying "We welcome
the project and are united in our support." (www.hydro.com)
This propaganda washed away in a bloodbath nine days later. On Dec. 16,
police shot and killed three local villagers in the town of Kaikanch, where
people have refused to move out for Utkal. Political leaders of the CPI
[ck] demanded a judicial inquiry into the incident. According to The Hindu,
politicians "said the killings of the tribals was a pre-planned one to
terrorize them to give into their demands and vacate their village for
enabling them to set up the project."
Hydro issued a press release two days later. "Three people were killed on
Dec. 16 when police opened fire on an aggressive crowd in the village of
Maikanch... Hydro profoundly regrets the incident, emphasizes Hydro
Aluminum information manager Thomas Knutzen." Knutsen said, "No
representatives from Hydro or Utkal Alumina were in the vicinity when the
incident occurred. Therefore we don't know any details."
Biswanath Sahoo, a party representative who visited the village after the
killings, said two platoons of police entered the village and brutally
attacked a woman. He said that men who heard the woman's cry were fired at
as they neared. Police shot and killed three of the men. They also shot
four cattle grazing nearby. ("Probe into Rayagada incident sought," The
Hindu, Dec. 22, 2000)
[Box]
A 16 year old boy from Kucheipadar has written songs about the Utkal
struggle. Here is one of them:
Wind! wind, Oh company wind,
People! flowing in whole of Orissa.
Come fight for our rights, Come, let us struggle.
We are struggling, we are struggling.
Come, we have to release our mother land,
Come my mother and sister, become a unity.
Come forward without fear.
We should not leave our motherland in the hands of the company,
In the hands of the companies.
Come together for struggle.
Don't watch and keep quiet, my struggling group.
Danger coming toward us, to give us tragedy and sorrow.
Send back this foreign company;
We may die without fearing the company,
Look my friends, to the company and to the government,
Coming toward us to destroy and demolish us.
We don't need Tata, Hydro, Indal.
We don't need, we don't need.
We fight for our land,
We may die, have no fear, come forward.
By liquor the company has tied our mouths,
With created fears, booked cases, and gun point money distributing;
Taking our land illegally,
Land alienation, land alienation.
Hey company and government!
We are aware;
Don't try anymore to cheat us.
Hear, hear, in our own village we are the government.
In our village we will judge;
Our land, our water cannot be traded,
The earth is ours, the earth is ours.
Come, come mother and sister,
Become unity, roar our united voice.
Send back to Indal, Tata, Hydro.
To save Orissa, save Adivasi and Dalit.
The earth is ours, it is our right.
(Source: "Folk songs against the Utkal project," NorWatch newsletter No. 4,
Feb. 1998)
While Utkal is the most prominent bauxite/alumina development, it is not
the only one in Orissa. NALCO plans to operate the world's third largest
alumina refinery in Damanjodi. In the Gadhamardan hills near the Hirakud
reservoir, Bharat Aluminium Cmpany (BALCO) tried to start mining bauxite in
the late 1980s. After blasting at BALCO's mines badly damaged the famous
Nrusinghanath Temple, people in the region had seen enough, and forced a
halt to the project.
Forced relocations and indigenous rights in other countries
The struggle in Orissa echoes similar contests between aluminum
transnationals and indigenous peoples around the world.
Australia
Bauxite mining in the Australian province of Queensland occurs on native
land. In Dec. 1996, the Australian high court ruled that Wik and Thayorre
aborigines hold legal Native Title claims on land that Comalco mines in the
town of Weipa. Billiton's bauxite mines in Gove are also on Aboriginal
land. (Suganthi Singarayar, "For Aborigines, Racial Discrimination Act is
Sacred," Inter Press Service, Jan. 27, 1997; Dr. Richard Howitt,
"Exploration, Mining and Indigenous Futures: What does it mean? Why does it
matter?," Macquarie University School of Earth Sciences, 1990)
Next to the Weipa mine, Alcan hopes to develop the Ely bauxite deposit. The
company holds a mining lease dating from 1965. In 1997, it was negotiating
with the local Aboriginal community to obtain access to land where it wants
to build a port. Australian Institute of Aboriginal and Torres Strait
Islander Studies, Native Title Research Unit archives)
Roger Moody called Weipa a "region flagrantly robbed by Comalco from its
Aboriginal inhabitants in the '60s, and which continues to be one of the
major disgraces of northern Queensland...No less controversial is
Pechiney's acquisition in 1981 - along with Billiton Aluminium - of a 40%
interest in the Arukun bauxite prospect in the same area, an aboriginal
reserve whose occupants are firmly against bauxite mining ." (Roger Moody,
"Gulliver PUK (Pechiney-Ugine-Kuhlmann) Dossier" in The Gulliver File -
Mines, people and land: a global battleground, Minewatch, 1992.)
In the 1980s, Alcoa's planned to build a $1.5 billion smelter in Portland,
Victoria, Austria. According to Moody, "the site is part of the
traditional land of the Aboriginal Gunditj-Mara people, who strenuously
fought - using court claims, direct action, occupations and sabotage of
Alcoa's machinery - to stop the smelter being built. Under such pressure
and because of the high electricity price charged by the Victorian state
government, the project was mothballed in 1982. The Labour government in
the state - despite token gestures towards Aboriginal land rights - revived
the project soon after coming to power in 1983, and will in fact take a 25%
stake in it." (ibid).
Brazil
In Brazil, the construction of Tucurui dam displaced more than 25,000
people. More than half of the power generated by the dam goes to aluminum
smelters in northern Brazil. According to the World Commission on Dams,
"subsistence farmers, fisherfolk, pastoralists, and riverbank cultivators"
all had to move out of the way for the new reservoir. In addition, 100,000
people were "affected by reduced water quality, loss of riverbed
cultivation, and decreased downstream fish populations."
"In the case of Tucurui, of the indigenous groups displaced only the
Parakana people were resettled; the other indigenous group that lost land
to the dam was not considered for resettlement benefits," reported the WCD.
The erection of transmission lines also impacts indigenous communities.
According to the WCD, "the Gavaio de Montanha indigenous people, whose
lands were affected by the transmission lines in the Tucurui project, were
initially not considered eligible for compensation but were later given
cash compensation."
After the reservoir was filled in 1984, the WCD reported, "an unusual
proliferation of Mansonia mosquitoes in rural areas close to the reservoir
forced farm families to leave their homes." Another post-construction
impact was the concentration of mercury from gold mining activities
upstream. Fish caught in the reservoir had more than double the maximum
safety level. (World Commission on Dams, "The Report of the World
Commission on Dams; Dams and Development: A New Framework for
Decision-Making," 2000, p. 106, 107, 119, 124)
Guinea
According to NorWatch, the Friguia bauxite and alumina project in Guinea
"has forcibly moved several villages, but the number of affected people is
unknown. It has been impossible to have details on how much is paid as
compensation when someone is forcibly moved, or how this has been carried
out. In the future even more people will have to move as the mine is being
extended. 16-18,000 people are still living within the concession area. The
local population complains of their cattle being run down by the company's
cars, and dying from eating remainders of explosive charges which originate
from the mining. They are not paid any compensation." (Tarjei Leer-Salvesen
and Morten Rønning, "Profits on arms, forced relocation, and environmental
scandals," NorWatch newsletter, June 1998).
Friguia's failure to compensate local villagers was reiterated in a local
newspaper report in 1998. According to Africa Energy and Mining, the
newspaper reported that Friguia managers "have been accused of dubious
financial dealings involving over-billing in favor of its suppliers. The
Conakry-based newspaper L'Independant cited a garage, security companies
and real estate owners in connection with the over-billing. It also said
the company had failed to pay village dwellers compensation for having to
re-locate, even
though it claimed to have sent the money to the local authorities." ("Four
pre-qualified for Friguia," Africa Energy & Mining, Dec. 2, 1998)
Malawi
**** DAPHNE -- This is actually more appropriate in the environment
chapter, within the bauxite section *****
In August 2000, the governments and Malawi and Mozambique discussed a plan
to mine bauxite from Mulanje Mountain, refine it, and ship alumina to
Billiton's Mozal smelter in Mozambique.
Malawi Vice President Justin Malewezi touted the deal. "This will be of
great benefit to both countries since Mozambique will cut expenses of
importing alumina from Australia while Malawi will benefit from job
creation." ("Talks on bauxite venture," ANN/IRIN, August 29, 2000)
A local conglomerate, Press Corporation Ltd., is seeking international
partners to build and operate the mine. In Sept. 2000, Malawi president Dr.
Bakili Muluzi said his government would send a delegation to the United
Kingdom to discuss a possible collaboration on mining the bauxite.
("President Muluzi promises to sack corrupt ministers," MBC radio, Sept.
23, 2000; "Outlet hope for bauxite," Africa Energy & Mining, Oct. 11, 2000)
The government estimates that the mountain holds over 50 million tons of
bauxite. Charles Kaphwiyo, Malawi's geological survey director, said the
bauxite would be dug out from a depth of 14 to 16 meters, and sent down the
mountain by rope and buckets. He estimated that "less than one-tenth" of
the mountain would be mined. ("Environmentalists Concerned Over Bauxite
Project," Africa News, Nov. 26, 2000)
"We have huge untapped mineral resources in Mulanje while our neighbor
(Mozal) is importing alumina from far away like Australia," said Leonard
Kalindekafe, mining director of the Ministry of Natural Resources. "This
is an opportunity the country cannot afford to lose."..(Brian Ligomeka,
"Malawi Mines Peak For Mozambique Factory," Africa News, Nov. 17, 2000)
Others, though, hold a different view. "While many people are just pegging
their thoughts on the economic aspect of mining bauxite on Mulanje,
consideration should be given to the devastation that the project would
have on natural resources and the people who live around the mountain,"
said Jones Njala, head of the Mulanje Mountain Conservation Trust, in Nov.
2000. (Africa News, Nov. 17, 2000)
Mulanje Mountain rises 3,000 meters above sea level and is the highest peak
in Centarl Africa. It spawns nine rivers upon which over 2 million people
depend. In 2000, UNESCO designated Mulanje Mountain as a biosphere reserve.
("Four new biosphere reserves designated in Africa," Africa News, Nov. 9,
2000; Africa News, Nov. 17, 2000)
Wildlife Society of Malawi director Daulosi Mauambeta said pollution from
the operation could impact water resources, small-scale farms, and tea
estates around the mountain. (Africa News, Nov. 26, 2000)
"The benefits in the form of job creation and the general creation of
wealth
from the mine are greater, so the mine will go ahead," said President
Muluzi. ("Malawi's Proposed Bauxite Mine Scales Environmental Hurdle,"
Africa News, Nov. 22, 2000)
Malaysia
For the time being, the Malaysian government has shelved a plan to build a
new 2,400 megawatt dam in Bakun, Sarawak. The dam would have fueled a
planned aluminum smelter and steel mill.
The Bakun dam, according to the head of the Coalition of Concerned NGOs,
could force the resettlement of 10,000 indigenous peoples.
"Why do we want toxic and energy-hungry industries such as Aluminium
smelters?," asked Dr. Kua Kia Soong, head of the coalition. "The earliest
justification for the Bakun dam during the Eighties was the need for energy
to fuel an Aluminium smelter in Bintulu. Aluminium smelting is one industry
that the developed countries want to dump on suckers like us because it is
environmentally toxic and it consumes voracious amounts of energy."
(Dr. Kua Kia Soong, Coalition of Concerned NGOs, press statement, June 10,
1996)
Sierra Leone
In 1995, civil war forced the closure of the Sieromco bauxite mine (owned
by Alcan subsidiary Alusuisse) in Sierra Leone. (Richard Carver, "Sierra
Leone after the ECOMOG intervention," Feb. 1997-April 1998, Writenet, April
1998)
"The tragedy unfolding in Sierra Leone may have its roots - literally -
embedded in a treasure trove of valuable underground minerals," wrote Kathy
Close in May 2000. The country hosts considerable natural resources,
including iron ore, gold, diamonds, and bauxite. (Kathy Close, "The Tragic
Treasure of Sierra Leone," May 23, 2000, on
http://www.oasistv.com/news/5-23-00-story-1.asp)
Suriname
A joint plan by Alcoa and Billiton to develop bauxite reserves in western
Suriname has raised fears among the indigenous community.
Alcoa and Billiton have mined bauxite in eastern Suriname for more than 50
years. Time and again, indigenous villages have vanished to make way for
bauxite mining. "The Government must help us if it is to respect our human
rights as defined by international human rights treaties," pleaded
villagers in one community surrounded by a new Alcoa operation.
Alcoa also operates an aluminum smelter in Suriname. The construction of a
dam to power the smelter flooded tropical rainforest and forced 6,000
people to move.
Now the companies want to mine one of the world's largest bauxite reserves,
the Bakhuis deposit, in western Suriname. In 1998, the Forest Peoples
Programme reported on the track record and possible future impacts of Alcoa
and Billiton.
The FPP raised and relayed fears of the impact of the new mining operation
in western Surinam. "Although the Indigenous population (Carib and Arawak)
of this area is sparse, mining operations will undoubtedly affect them and
will require clearing of vast areas of pristine tropical rainforest...
"Bauxite mining operations," added the FPP, "have historically taken place
with little or no regard for the rights and well-being of Indigenous
peoples and Maroons and the environment. In 1963-63, Alcoa constructed the
Afobaka dam to provide power for a smelter at Paranam. This dam inundated
some 600 square miles of tropical forest and forced the relocation of
approximately 6000 Saramacca and Aucaner Maroons from their ancestral
territories. These territories had been ceded to the Maroons in treaties
concluded with the Dutch colonial administration in the 18th and 19th
centuries. The communities were moved to so-called 'transmigration
villages,' where most remain today. These communities lack basic
facilities, including electricity, even though the power lines to Alcoa's
smelter run nearby. The communities were paid the equivalent of US$3 in
compensation and were not provided with secure land rights in their new
areas....
"Maroon communities near Moengo in east Suriname, like Adjoemakondre, have
also experienced serious problems caused by bauxite mining operations.
These communities have never been compensated for the loss of their lands
and livelihoods and for severe environmental degradation caused by
Suralco's activities.
"These once forested communities now live in a moonscape, surrounded by
blasted rock, covered in dust and debris from blasting and are subjected to
high intensity lights that allow mining to take place 24 hours a day, seven
days a week.
"Adjoemakondre is an extreme example of the impact of Suralco's activities.
It is presently surrounded by three active concessions and mining is taking
place less than 200 meters from the village itself. Much of the community's
agricultural and hunting lands, and in some cases houses, have been
destroyed and the river that runs through the village has turned
brown-orange due to run off from the mining areas. Community members also
allege that their health has suffered as a consequence of environmental
contamination caused by Suralco's activities.
"Suralco commenced operations near Adjoemakondre in 1991 and shortly
thereafter informed the community that they would be relocated as Suralco
wanted to mine under the village. The community objected and sought help
from the government. Negotiations between Suralco and the government
ensued, resulting in an agreement to relocate the village. The community
was not accorded a meaningful role in the negotiations. They did, however,
accept relocation at this point as they saw it as inevitable. Suralco
identified a site, which had already been mined out near the village, and
bulldozed it flat to build a new village. At this point, Suralco changed
its mind and, pointing to its contract with the government, stated that the
government alone was solely responsible for ensuring the welfare of local
communities. The government took no action and relocation did not take
place. Seven years and numerous requests to the government and Suralco
later, the community's position has worsened." ("Maroon Community Petitions
Suriname Government about the Operations of a US-owned Bauxite Mining
Company," Forest Peoples Programme, September 17, 1998)
Villagers from Adjoemakondre petitioned the Surinam government in 1998 to
give them "respect for our rights, especially our land rights that are not
presently recognized by the state of Suriname and are affected by the
mining activities of NV Suralco, a foreign-owned company. This company has
destroyed our environment and our ability to feed our families. We also
seek compensation for the expropriation of our property and interference
with our rights to hunt, fish and farm on our ancestral lands. The
preceding, which was authorized by the Government of Suriname, was caused
by the operations of Suralco. These operations are on-going and remain a
threat to our existence and well-being. To ensure that violations of our
rights cease immediately, we request in the strongest possible terms, that
the government of Suriname take prompt and decisive action to investigate
and remedy these violations of our rights.
"The village was established by our ancestors over 200 years ago... Suralco
arrived in our territory in 1991 and began mining operations in the
immediate surroundings of our village. At that time, we protested against
this and requested that the Government intervened to find a solution. The
Government and Suralco then entered into negotiations, which resulted in
Suralco promising to relocate the village and provide adequate housing and
other facilities for us. Suralco did not honor this promise, stating that
their activities were authorized by the Government when it gave them
concessions and that it was the Government's responsibility to relocate and
provide for the village. Since that time, negotiations have ceased and we
are left with a worse situation than we had in 1991." (Wilma Prika,
Captain, Adjoemakondre, Petition to the Suriname Government Concerning the
Situation in Adjoemakondre, 1998)
Tajikistan
The aluminum smelter in Tursunzade has been a focal point of civil war
combatants. In 1997, up to 25 casualties were reported in a battle between
two army units "apparently over control of the aluminum plant there,"
according to the United Nations. ("Report of the Secretary-General on the
Situation in Tajikistan," United Nations, S/1997/415, May 30, 1997)
United States
Alcoa digs lignite reserves in the central Texas counties of Bastrop and
Lee. This lignite, a kind of coal, fuels an Alcoa smelter in Rockdale,
Texas. County residents are fighting the company's plans to expand
strip-mining to 15,000 acres of land owned by San Antonio's City Public
Service. In the deal, Alcoa would pump aquifer water that would be
extracted as part of the mining operations. (Peggy Fikac, article in
Express-News, Oct. 19, 1999)
Local residents formed the organization Neighbors to Neighbors to fight
resettlement and water depletion that could result from the pact.
According to Bastrop County resident David Houghtling, the Alcoa/San
Antonio "water deal will affect scores of families in Bastrop and Lee
counties. Some of this property has been in families for generations. It
appears that Alcoa intends to use the condemnation powers of San Antonio to
push people off their property."
He said that Alcoa officials in 1999 contacted "an 85-year-old widowed
family member of mine and told her that she would have to sell her land and
house to them. When she asked what Alcoa was going to do with her house,
she was told that they were going to tear it down. This home has afforded
her a sense of independence and freedom in her later years and Alcoa has no
legal right to condemn property. They have made similar threats to other
neighbors." (Statement by David Houghtling, on the website
neighborsforneighbors.com, March 8, 1999)
Workers Rights
Labor is the biggest cost in bauxite mining and the second biggest cost,
after energy, in aluminum smelters. Most of the large producers have tried
to quell efforts by their workers to organize and raise benefits.
In North America, aluminum smelter operators are at war with unionized
workers, represented by the United Steelworkers of America and the Canadian
Auto Workers. Aluminum corporations' battles with its workers have
frequented other facilities across the globe. In 1999 and 2000, workers
were locked out at smelters operated by Kaiser, Southwire in the U.S.
Unrest also struck smelters in Germany, France, Australia, Romania,
Venezuela, and South Africa. (Stephen Johnston, "Aluminium," Mining Annual
Review, March 2000)
Alba
In October 1974, according to Human Rights Watch, strikes at the Aluminium
Bahrain plant led the country's leader, Amir Isa, to impose a state
security law that would allow the government to arrest and imprison for up
to three years without trial any person suspected of having 'perpetrated
acts, delivered statements, exercised activities or... been involved in
contacts inside or outside the country, which are of a nature considered to
be in violation of the internal or external security of the country.'"
(Human Rights Watch/Middle East, "Routine Abuse, Routine Denial Civil
Rights and the Political Crisis in Bahrain," June 1997)
More recently, human rights groups have sought protections for a 30 year
old Alba employee, Ahmed Khalil Ibrahim Hubail al-Kattab. On July 1, 1996,
Bahrain's State Security Court sentenced him and two other men to death.
The men had pled not guilty to setting a fire that killed seven Bangladeshi
workers at a restaurant earlier in the year. Their attorneys produced more
than 50 witnesses who asserted that the men were innocent
Amnesty International issued an urgent appeal to the government. Amnesty
said the trial "fell far short of international standards for fair trial"
and feared "that their execution is imminent." It said that prosecutors
relied "solely on written confessions they had made during the
interrogation. The organization fears that the defendants may have been
convicted on the basis of confessions extracted under torture." ("Security
forces kill a women, the people of Bahrain practice their right of peaceful
civil resistance," Voice of Bahrain homepage,
www.vob.org/english/news7.htm, July 1996; Amnesty International, press
release, July 23, 1996)
Billiton
Billiton, wrote Leon Pretorius of the International Labour Resource and
Information Group, "has a history of conflict with worker organizations."
(Leon Pretorius, "Regional integration and development in Southern Africa:
A case study of the MOZAL Project and its implications for workers,"
International Labour Resource and Information Group, March 2000)
In Nov. 1999, Billiton announced plans to lay off 5,000 workers from its
aluminum smelters in Richards Bay, South Africa. A month earlier, the
company successfully petitioned a court to ban a strike by the National
Union of Metalworkers of South Africa (NUMSA). The union previously struck
in August 1999 after wage negotiations disintegrated. NUMSA threatened a
"massive strike" against Billiton's "unilateral wage policy implementation"
("Numsa plans strike over Billiton layoffs," Business Day, Sept. 13, 2000;.
Mining Annual Review, March 2000)
Several times in 1998, workers at the Billiton-run Mozal smelter in
neighboring Mozambique staged strikes.("Background on South African company
Billiton," Midwest Treaty Network website)
"Although multinational corporations such as Billiton and Mitsubishi are
investing in other developing countries they keep their technology and
knowledge intensive activities in the more industrialized countries," wrote
Pretorius, referring to the two corporate owners of the Mozal project.
"Very few if any of the skills and technology of producing Aluminium will
be transferred to Mozambicans. It appears that (these) companies have been
merely using Mozambique as a way of gaining access to tax benefits, cheap
infrastructure and low cost labor."
The chairman of Mozal, Bob Barbour, claims that the consortium awarded 67
of its 110 contracts to Mozambican companies. Pretorius and others have
asserted that other companies are securing the most lucrative contracts,
including almost all of the infrastructure projects.
"Mozambique offers more flexible labor markets than South Africa," observed
Pretorius. "There are less labor regulations, weaker and less militant
trade unions, as well as much lower wages. The promise for Mozal is that it
will lead to industrial development and create jobs in Mozambique. But many
people have asked what type of industrial development and for whose
benefit? An important part of development concerns the ownership and power
to access resources. How do the unemployed and women agricultural workers
who comprise the majority of the Mozambican workforce benefit from this
project?"
Pretorius noted that "the birth pangs of the ... Mozal project have been
accompanied by worker strikes and protest action by indigenous women
entrepreneurs prevented from benefiting from the project."
About 800 workers building the smelter went on strike from Sept. 28 to Oct.
1, 1998, demanding a 600 percent pay hike. They were earning about 24 U.S.
cents per hour. After the strike ended, the company agreed to only a
two-step, 20 percent raise for unskilled workers. (Pretorius)
Kaiser
Kaiser workers, members of the Steelworkers, walked out at the Alpart
bauxite facility in Jamaica and five U.S. locations for five days in 1996.
In Sept. 1998, 3,000 workers on strike again. The Steelworkers union
offered to return to work in Jan. 1999; however, Kaiser locked them out.
(Maxxam, Amendment No. 2 to Form S-3 filed with SEC, April 12, 1996; Mining
Annual Review, March 2000)
The union and the company finally reached a settlement in September 2000.
The new labor contract cut 540 jobs (out of 2,800) at five Kaiser
facilities. Shortly thereafter, Kaiser opted to keep its Washington state
smelters closed and profited from selling its power allocation on the open
market. (Kaiser press release, Feb. 7, 2001; Kaiser Aluminum & Chemical
Corp., Form 10-Q, filed with the Securities and Exchange Commission, Nov.
9, 2000)
VII. Environmental Health
"I don't see environmental issues as a negative for aluminum or Alcoa, they
are our friend. As long as legislatures and governing bodies don't do
stupid things, we'll be fine," - Paul H. O'Neill, then-chairman of Alcoa
(now U.S. Secretary of the Treasury), as quoted in Aluminium Today, 1999.
("O'Neill's Alcoa: Big group with a big appetite," Aluminium Today, Jan. 1,
1999)
Bauxite mining
According to the International Aluminium Institute, "of the land disturbed
each year by bauxite mining, 76% is forested, 19% agricultural and pasture
and 2% shrubland." The IAI said that of the 1,591 hectares mined in 1998,
80% was wildlife habitat; 175 hectares was tropical rainforest."
(International Aluminium Institute, "Bauxite mine rehabilitation," on its
website, world-aluminium.org, 2000)
* Adjoemakondre, Surinam (Alcoa)
In a 1998 petition to the Surinam government, people of the village of
Adjoemakondre detailed the impacts of Alcoa's bauxite mining operations
that began in 1991. "Our agricultural plots and houses have been destroyed,
without any compensation," they wrote. "Our river has been polluted so
badly that we can no longer use it - wastes from the mining operation run
down hill through the village into the river, turning it an orange-brown
color; health problems have occurred from villagers using the river water;
use of dynamite by the company causes noise pollution and has contributed
to the loss of game animals we use for food; (and) destruction of the
forest and pollution of the river has also substantially limited our
ability to hunt and fish on our lands." (Wilma Prika, Captain,
Adjoemakondre, Petition to the Suriname Government Concerning the Situation
in Adjoemakondre, 1998)
* Guinea
The Friguia mining/refining operation in Guinea, according to NorWatch, has
generated "an enormous red mud deposit, which covers an entire valley. In
this valley there were previously several villages, which are now drowned
in industrial waste. Hydro admits that this deposit is not 'state of the
art', for example it is not secured with a protective membrane to prevent
leakage of caustic soda and other effluents into the subsoil water. The
subsoil water has not been tested." (Tarjei Leer-Salvesen and Morten
Rønning, "Profits on arms, forced relocation, and environmental scandals,"
NorWatch newsletter, June 1998).
Alumina refineries
The Bayer Process of refining bauxite into alumina generates red mud, also
known as bauxite residue. Depending on the grade of bauxite used, from 0.3
to 2.5 tons of red mud are generated per ton of alumina produced.
(International Aluminium Institute, "Bauxite residue," on
world-aluminium.org)
Red mud contains iron oxides, silica, titanium, zinc, phosphorous, nickel,
vanadium, and compound formed by the adding of lime into the refining
process. It is usually dumped on land near the refinery.
Liquor burning plants at refineries are a source of air pollution.
* Yirrkata, Queensland
Red mud residue and caustic soda from the alumina refinery in Yirrkata,
Queensland was found poisonous to fish. (See Aluminum and Our Environment,
International Development Action, 1976, pp. 93-96)
* Port Allen, Louisiana (Alcoa)
Federal agents executed two search warrants at Alcoa's Port Allen,
Louisiana, alumina plant in March 1999. Alcoa's subsidiary, Discovery
Aluminas, also supplied a federal grand jury with wastewater discharge and
toxic waste management records.
The refinery produces specialty alumina powders and other products consumed
in the petrochemical industry.
A month later, the grand jury indicted the Port Allen plant manager on a
charge of violating the Clean Water Act. Discovery reached a plea agreement
in October 2000, in which the company and four employees agreed to plea
guilty a felony count of violating the federal Clean Water Act and the
state enforcing regulations, pay a $700,000 fine to the U.S. government,
pay $50,000 in community restitution, and $50,000 in community restitution.
(Alcoa, Form 10-Q, submitted to U.S. Securities and Exchange Commission,
Oct. 20, 2000)
Alcoa agreed that it had poured ammonia-laden slurry into a stream that
drains into the Intracoastal Waterway, south of Port Allen, in violation of
the Clean Water Act. The discharges turned the ground white. The employees
-- two supervisors, the environmental compliance officer, and director of
management -- face possible sentences of up to one year in prison, and
fines of up to $100,000. (Mike Dunne, "Discovery Aluminas pleads guilty to
polluting Port Allen waterway," The Advocate (La.), Dec. 12, 2000)
* Western Australia (Alcoa)
The installation of a liquor burning plant at Alcoa's Wagurup refinery in
1996 brought over 300 complaints from the plant's workers and residents of
the southwestern towns of Yarloop and Waroona. Alcoa's other liquor burning
plant in Western Australia, at the Kwinana refinery south of Perth, has
generated similar concern.
The equipment burns off carbon from bauxite. Dust emitted from liquor
burning plants irritates eyes and the respiratory system. Highly
carcinogenic benzene and more than 200 other chemicals are emitted from
liquor burning plants.
According to a report commissioned jointly by The Wagerup Community Health
Awareness Group and the Australian Manufacturers Workers Union asserted in
a report that symptoms range from irritation to the eyes and respiratory
tract, to insomnia and diarrhea, to constant flue-like symptoms.
According to Ian Grant, a maintenance contractor at the Wagurup plant, Ian
Grant, said that "we were never given proper breathing apparatus. When we
complained about the conditions we were told to keep our mouths shut as the
contractor (Asea Brown Boveri)."
Grant said that he started feeling sick in Sept. 1997. His illness
continued and worsened through December. "I developed a mouthful of ulcers.
I was getting sicker every day," he said. Early the next year, "I collapsed
in a big heap and that was the end of me. My kidneys gave up. I went to a
doctor twice early in January 1998 after my lungs started bleeding again."
He said he was diagnosed with Goodpastures disease, which attacks the
body's auto immune system.
Another worker, Bill Van Der Pal, said he and many others got sick. "Only
after the workforce threatened to close down the plant did Alcoa spend $5
million to deal with the emissions from the liquor burner," he said. "They
installed a catalytic thermal oxidizer (CTO)."
(Joe Lopez, "Workers and residents in Western Australia suffer health
problems from Alcoa's alumina plant," World Socialist Website, Nov. 11,
1999)
* Bintulu, Sarawak, Malaysia and Gladstone, Queensland, Australia (Comalco)
On April 3, 2000, Comalco decided to shift the location of a proposed
alumina refinery from Bintulu, Sarawak, to Gladstone in the Austrialian
state of Queensland. Rather than draw power from a new dam in Sarawak,
Comalco will draw from Chevron new gas pipeline from Papua New Guinea (PNG)
to Queensland.
People in Sarawak had vigorously protested the planned alumina plant. More
than 100 million tons of red mud would have been dumped there. A national
park is three kilometers from the planned alumina site.
The 1,020-hectare Bintulu alumina project was projected to import generate
more than 3.3 million tons of waste each year from processing Weipa,
Australia, bauxite. New Straits Times reported in 1999 that "there have
been accusations that the company is only using Malaysia for the 'dirty
process.'" (Esther Tan, "Alumina refinery will be a really big waste
producer," New Straits Times, Oct. 9, 1999)
Prior to Comalco's decision, a Sarawak environmentalist accused the company
of a "Pollution Haven Here, Conservation Elsewhere" mentality. "The choice
of Similajau (Sarawak) 2,000 nautical miles further than Gladstone, would
only prove the Pollution Haven hypothesis. The hypothesis suggests cheaper
labour and looser environmental measures in developing country," wrote Wong
Meng Chuo.
Villagers from the nearby towns of Kg. Kuala Nyalau, Kg. Nyalau Tengah and
Kg. Ulu Nyalau wrote a letter of protect to the Chief Minister of Sarawak.
They worried that the alumina refinery would involve the acquisition of
much of their agricultural land, on which they depend. (Letter of protest
from villagers to the Chief Minister of Sarawak, April 4, 1999, as
summarized by Rengah Sarawak)
"The end product, alumina, is not an item of consumption to be enjoyed by
the majority of local people. Sarawak's environment and natural access
should be traded off with short term economic benefit for some people,"
noted Mr. Wong. (Wong Meng Chuo, "A Review of the Detailed Environmental
Impact Assessment (DEIA) of the Proposed Alumina Refinery in Similajau,
Bintulu, Sarawak," IDEAL, Sibu, Sarawak, Oct. 4, 1999)
After Comalco decided to build in Queensland, a Sarawak group warned about
"equal concerns of similar and other negative impacts at Gladstone and
PNG... The impacts of the gas pipeline connecting the two countries over
land and sea coral reef areas are of great concern. Equally of concern is
also the environmental impact of the proposed plant would inevitably bring
upon should the project go ahead eventually. The social-economic effects on
the affected communities should be attended to too. The fate of human
beings is globally linked, and shifting the problems is not a solution at
all." (MC Wong, "Bintulu Alumina Project Scrapped: A Matter of Shifting the
Problems?," Rengah Sarawak, April 7, 2000)
Aluminum smelters
On Belugas and Cancer
Belugas, like canaries in a coal mine, speak to a particular poison spewed
by aluminum smelters. In Quebec, where the Saint Lawrence River meets the
North Atlantic's frigid Labrador Current, upstream industry is devastating
a population of these small white whales. Pollution is the greatest threat
to the St. Lawrence beluga population, whose numbers dropped from 5,000 to
about 650 in the past century.
Alcan is a dominant industrial force in Quebec. It has installed a network
of dams in the Lac-Saint-Jean/Saguenay River region, with a combined
capacity of 2,687 megawatts, to fuel nearby smelters with a combined
capacity of 700,000 tons per year. (www.alcan.ca)
These smelters, like all that burn coal tar, emit chemicals called
polycyclic aromatic hydrocarbons (PAHs). In these plants, coal tar pitch
and petroleum coke are combined and baked to make anodes and cathodes for
smelting aluminum. Anode forming, baking and rodding, potlining and pot
starting activities all release toxic emissions from coal tar.
Veterinary pathologists from the University of Montreal have fingered PAHs
discharged from the upstream aluminum smelters as a contributor to a cancer
epidemic among the belugas.
According to these researchers, one out of five adults belugas suffer from
cancer, comparable to the 23% cancer rate among humans in the western
world. "Such a high percentage had never been observed in any wild animal
species, terrestrial or aquatic (with the important exception of fish). To
our knowledge, this is the first population of wild mammals that can be
compared to humans in this regard," University of Montreal researcher
Daniel Martineau observes in the website "Diseases and Causes of Death of
Beluga from The St. Lawrence Estruary, Quebec, Canada."
(www.medvet.umontreal.ca/services/beluga/beluga_homepage.html)
Some cancers in belugas have been fuelled by other toxic substances,
particularly PCBs and the pesticides Mirex and DDT. But researchers have
also found high levels of PAHs in the whales' tissues.
Dr. Lee Shugart of the Oak Ridge National Laboratory (Tennessee, USA)
examined brain tissue from three dead whales and found the PAH compound
benzo-a-pyrene. The observed concentrations of this carcinogen in the
tissue, he concluded, "would produce cancer in other laboratory animals
under similar conditions." ("Research: St. Lawrence River Belugas," The
Scientist 14[19]: 19, Oct. 2, 2000)
Dr. Martineau surmises that the belugas' diet transports PAHs from the
sediment to their tissues. "Invertebrates living in sediments contaminated
by PAH accumulate these compounds.. In summer, beluga are known to feed in
significant amounts on bottom invertebrates," he writes. The pathologist
surmises that this exposure could be the reason why he has observed seven
cases of rare small intestine cancer among the population of 650 belugas
since 1983.
According to Dr. Martineau, extraordinary levels of up to 4,500 parts per
billion of total PAH has been found in the sediment of the Saguenay River,
which is part of the belugas' habitat. The PAH originates "for the most
part from the aluminum factories located upstream."
Around the beluga's habitat lie Alcan's 206,000 ton smelter in Laterriere,
232,000 ton smelter in Jonquiere, 415,000 ton smelter in Baie Comeau, and
its new 385,000 ton smelter in Alma. Throughout the Lac-Saint-Jean/Saguenay
region, humans also suffer from unusually high cancers. According to a
Canadian government survey, the region leads the county in rates of birth
defects. It also leads the province of Quebec in deaths caused by caused by
cardiovascular and cerbrovascular diseases and malignant tumors, according
to a separate study by the Quebec Department of Health (The Scientist)
A study of Jonquierre smelter workers in the late 1970s found that 73
workers had bladder cancer, 60 percent more than was statistically likely.
The number of workers with bladder cancer rose to 130 by 1990. (ibid).
Similar horrors have visited workers at an Alcan smelter on the other side
of Canada, in the province of British Columbia. Here, in Kitimat, Alcan
operates a 279,000 ton smelter.
In October 1989, NCI Cancer Weekly reported that "Alcan... says a study has
shown that workers at its Kitimat aluminum smelter in northwestern British
Columbia have had a slightly higher risk of bladder cancer." ("Bladder
cancer risk noted; Canada," NCI Cancer Weekly, Oct. 9, 1989)
Between 1986 and 1995, the Canadian Board of Occupational Health ruled that
23 workers were disabled by or died from cancers created by on-site
exposures. Tar fumes, pitch/coke dust, PAHs and other materials caused
mesothelioma, skin cancer, bladder cancer, and lung cancer in millwrights,
potroom workers, poliners, and other operators and servicemen. (Canadian
Auto Workers Local 2301-Kitimat Smelter and Kemano Power Operaions Workers,
"WCB cancer registry data," on www.sno.net/caw2301/april98data.htm)
Medical scientists at the University of Montreal, analyzed workers health
records at Alcan's Arvida Works in Jonquierre, Quebec. In a study published
in March 1995, the doctors confirmed the "relationship between exposure to
coal tar pitch volatiles and bladder cancer among primary aluminum
production workers." (Tremblay C, Armstrong B, Theriault G, Brodeur J,
Departement de medecine du travail et hygiene du milieu, Universite de
Montreal, "Estimation of risk of developing bladder cancer among workers
exposed to coal tar pitch volatiles in the primary aluminum industry,"
American Journal of Industrial Medicine, March 1995 (27(3):335-48.)
Despite the long known correlation between coal tar pitch exposure to
cancer in workers, it was not until December 1999 that Alcoa warned 3,000
workers at its Australia smelters about the danger. The company also
ordered new measures at its smelters worldwide to reduce coal tar exposure.
"The letter did not explain why the company had waited five years before
informing workers of the results of the 1995 study of Alcan employees at
the Arvida smelter in Quebec," noted Margeret Rees of Australia. (Margaret
Rees, "Alcoa Australia admits cancer dangers," World Socialist Web Site,
January 15, 2000.)
In fact, according to an article in the Herald Sun of Australia, Alcoa knew
of potential cancer risks in its Portland and Point Henry smelters since at
least 1989. "A medical specialist at Melbourne's respected Peter MacCallum
cancer hospital sounded alarm bells over potential cancer and chronic
asthma dangers in 1989. Cancer expert Dr. Cyril Minty warned pot room and
other workers at the Portland and Point Henry smelters could develop the
diseases if they continued to work in the same conditions for a long time."
When the newspaper reported the doctor's warning, Alcoa demanded a printed
retraction and said that it "emphatically rejects" any cancer risk among
smelter workers. (Karen Collier and Mark Dunn, "10 years of warnings,"
Herald Sun, Dec. 16, 1999)
Alcoa sent similar warnings to thousands of its current and former
employees worldwide. Recent studies, said Alcoa spokesman David Neurohr,
found "a small increase in cancer could be expected at lower levels of
exposure than had previously been expected... We are just being responsible
in keeping our employees informed." ("Alcoa health warning," Mining
Journal, Dec. 17, 1999; "Alcoa warns employees of possible cancer risk,"
Chicago Tribune, Dec. 20, 1999)
Spent pot lining
Every 6 or 7 years, carbon linings are replaced in pots used in aluminum
smelters. This lining (or cathode) is made of refractory bricks and carbon.
It also contains material from the electrolytic bath: heavy metals and
cyanide. (International Aluminium Institute, "Cathode waste," on its
website world-aluminium.org)
Around the world, most spent potlining is landfilled. Some is stored above
ground in a dry chamber. In the United States, the Environmental Protection
Agency first listed spent potliners as a hazardous waste (code K088). It
prohibits the landfilling of spent potlining unless it has been treated to
reduce the amount of hazardous constituents: 25 in all, including cyanide,
fluoride, toxic metals (including lead and mercury), and PAHs. (U.S.
Environmental Protection Agency, "Land Disposal Restrictions; Treatment
Standards for Spent Potliners From Primary Aluminum Reduction (K088) and
Regulatory Classification of K088 Vitrification Units," Federal Register,
July 12, 2000 (Vol 65, No. 134), pp. 42937-42959)
According to a June 20, 1998, report in the main newspaper of Surinam, De
Ware Tijd, Alcoa's subsidiary might bury toxic waste not only from its
Suralco smelter but also waste from abroad. "Suralco is planning to bury
its chemical waste, the so-called 'spent pot lining' (SPL), just as it did
in 1993. It will not only bury waste from the aluminum smelter at Paranam,
but also chemical waste from the parent company Alcoa in Pittsburgh," the
Forest Peoples Project quoted the newspaper as reporting. ("Maroon
Community Petitions Suriname Government about the Operations of a US-owned
Bauxite Mining Company," Forest Peoples Programme, September 17, 1998)
Illegal wastewater discharges
In March 2000, Alcoa agreed to pay $8.8 million to settle environmental
claims filed by the federal Justice Department and the Environmental
Protection Agency. The agencies charged Alcoa with violating the Clean
Water and Clean Air Acts at its Warrick, Indiana, sheet production plant.
The payout included a $2.4 million fine; the balance will be spent to
reduce hazardous waste generation and study air pollution reduction
technology.
The Justice Department alleged that Alcoa "illegally discharged
inadequately-treated wastewater to the Ohio River from 1994 until 1999,
while company-sponsored tests showed that the mixture of pollutants in the
wastewater was deadly toxic to fish and invertebrates." (U.S. Department of
Justice, "Alcoa to pay $8.8 million to settle environmental claims," press
release March 13, 2000)
Asthma
In 1999, the Comalco/Rio Tinto-controlled Boyne Smelters Ltd of Australia
settled a ten-year lawsuit filed by 18 pot room workers. Boyne paid over
A$1 million to settle claims that they contracted asthma working at the
smelter. (Stephen Johnston, "Aluminium," Mining Annual Review, March 2000)
Flouride emissions
Flourides are produced during the reduction of alumina, during "anode
effects." Small quantities of these emissions have big impacts.
The contributions of these emissions are discussed in the Global Warming
chapter of this report. The principal kinds of fluorides emitted,
tetrafluoromethane and hexafluoroethane, also have significant local health
impacts.
In India, the NALCO aluminum smelter in Angul, Orissa, is widely believed
to be the source of severe fluoride contamination among people and animals
living nearby. This plant discharges more than 220 tons of fluoride into
the groundwater and surface water, according to 1992 tests run by the
Orissa State Prevention and Control of Pollution Board. ("TTPS releases SPM
into Nandira," Nandira, March 1993)
Many villagers have reported brittle bones, tooth and gum diseases, lumps
of dead skin, and a host of other symptoms of fluorosis. Cattle, more prone
to fluoride contamination, commonly suffer from bone deformities, the loss
of teeth, a sharp drop in birth rates and a sharp rise in death rates. In
one village, one kilometer from the Angul plant, the number of cattle
declined from 3,000 to less than 100 head over a ten year period. ("The
Spectre of Industrial Pollution in Angul-Talcher Area," Nandira newsletter
of District Industrial Pollution Control and Citizens' Action Project,
Dhenkanal, Angul, late 1993, p. 16)
Although state regulators have demanded that NALCO provide piped water to
local villages, company officials have denied that they are responsible for
the fluorosis outbreak, and the resultant decimation of the local cattle
herds. The smelter's discharge canal, which flows into the Nandira river,
is used by people for bathing, washing clothes, and drinking. (Nandira,
1993)
In the same Indian state, the Indalco smelter caused widespread fluorosis
among local villagers. In 1990, scientists from G.M. College of Sambalpur
examined villagers and found that an astounding 67 percent of men and 64
percent of women suffered from fluorosis. People aged 12 to 19 were most
severely impacted. The researchers also found that the water and vegetation
in the areas were "highly contaminated by fluorides." (U.N. Samal and B.N.
Naik, "Dental fluorisis in human beings around an aluminium factory of
Orissa," Journal of Environmental Biology, V. 11, No. 4, Oct. 1990)
Despite this track record, in 2000 and 2001 Nalco is expanding its capacity
from 230,000 to 345,000 tons. (Stephen Johnston, "Aluminium," Mining Annual
Review, March 2000)
In British Columbia, Alcan's Kitimat smelter is Canada's largest emitter of
hydrogen fluoride. In 1997, the plant released over 485 tons of hydrogen
fluoride, accounting for 9% of the province's on-site releases. (Burkhard
Mausberg, Canadian Environmental Defense Fund in Toronto)
The 514,000 ton per year aluminum smelter in Tursunzade, Tajikistan, has
been "the source of significant adverse health effects, both to the
residents of Tursunzade in Tajikistan and the bordering communities in
Uzbekistan. Livestock were losing their teeth and dying, and the teeth of
local children have been found to be discolored," according to the Slavic
Research Center. The plant emitted, at peak operating capacity, 193 tons of
fluorides annually. (Bakhtior Islamov, "Aral Sea Catastrophe: Case for
National, Regional and International Cooperation," Slavic Research Center,
1998)
Sulfur Dioxide
The aluminum industry generates sulfur dioxide emissions through the
burning of fossil fuels at its captive power plants, the generation of
steam at alumina refineries, and the consumption of anodes in smelter pots.
Point Comfort, Texas (Alcoa)
Alcoa's refinery and smelter complex in Point Comfort, Texas, is a federal
Superfund site. According to the National Oceanic and Atmospheric
Administration, "between 1948 and the present, Alcoa has constructed and
operated several types of manufacturing processes at this facility,
including aluminum smelting, carbon paste and briquette manufacturing,
gas processing, chlor-alkali processing, and alumina refining. Past
operations at the facility have resulted in the release of hazardous
substances into the environment, including through the discharge of
mercury-containing wastewater into Lavaca Bay from 1966 to 1970 and
releases of mercury into the bay through a groundwater pathway. In
April 1988, the Texas Department of Health issued a 'closure order'
prohibiting the taking of finfish and crabs for consumption from a
specified area of Lavaca Bay near the facility due to elevated mercury
concentrations found in these species." (National Oceanic and Atmospheric
Administration, "Alcoa Point Comfort/Lavaca Bay NPL Site, Point Comfort,
Texas: Notice of Availability and Request for Comments on a Draft Damage
Assessment and Restoration Plan/Environmental Assessment for Ecological
Injuries and Service Losses," Federal Register, July 14, 2000 (Volume 65,
Number 136), pp. 43739-43740)
IX. Aluminum and global warming
[see old chapter nine]
The aluminum industry is a significant contributor to global climate change
for two reasons: (1) it consumes enormous amounts of energy, much of it
fossil fuels such as coal that release carbon dioxide when burned and (2)
aluminum smelters produce small quantities of extremely potent greenhouse
gases.
An MIT study found that the industry emits the equivalent of over 3 billion
tons of carbon dioxide per year, or about 1 percent of global emissions of
anthropogenic greenhouse gas emissions. This study further predicts a rise
in total emissions to around 4 billion tons of carbon dioxide equivalent by
the year 2030.
In 1999, The Australia Institute, an environmental group, reported that
shutting down the country's smelters would be a net economic benefit for
Australia. It claimed that subsidies of A$410 million for inexpensive
energy and A$430 million for "unpaid" greenhouse gas emissions outweigh the
smelters' economic contributions. (Stephen Johnston, "Aluminium," Mining
Annual Review, March 2000)
Carbon dioxide
The industry emits carbon dioxide at each stage of production, from the
mining and processing of bauxite, to the electrolytic refining of alumina,
and the casting of aluminum.
A quintet of Massachusetts Institute of Technology scientists, led by
Jochen Harnish, in a 1999 study titled "Primary Aluminum Production:
Climate Policy, Emissions, and Costs," found that "the source of electric
energy used for the electrolytic reduction is the single most important
factor influencing total carbon dioxide emissions from primary aluminum
production. The specific emissions of CO-2 vary by a factor of five
depending on whether coal or hydroelectricity is used as a source of power
for the reduction cells." (Jochen Harnisch, Ian Sue Wing, Henry Jacoby,
Ronald Prins, "Primary aluminium production: climate policy, emissions and
costs," paper presented at the Kyoto and Montreal Protocols' Joint Expert
Meeting, Petten, May 1999)
Another study has calculated that the aluminum production cycle, including
mining, processing, refining, and casting, produces about 12 tons of carbon
dioxide per ton of aluminum produced. (R. Huglen and H. Kvande, "Global
considerations of aluminium electrolysis on energy and the environment,
Light Metals 1994, pp. 373-380)
The industry's International Aluminium Institute has lower carbon dioxide
estimates of 7.4 tons of carbon dioxide per ton of aluminum production
(including 5.8 tons from energy and 1.6 from the electrolytic process).
(IAI, "Aluminium's Life Cycle," on website world-aluminium.org, 2000)
The MIT study predicts that CO-2 emissions from the industry will rise from
about 2 billion tons in 1985 to about 3 billion tons in the year 2030. The
more coal that is consumed to power new capacity, the more emissions will
occur. If 75% of new capacity is fueled by coal, then the amount of CO-2
generated per ton of aluminum cast would increase from 12 to 18.3 tons.
PFCs
In 1991, Dr. Dean Abrahamson of the University of Minnesota discovered that
primary aluminum smelters produce two extremely potent greenhouse gases:
tetrafluoromethane and hexafluoroethane.
With atmospheric lifetimes are at least 10,000 years, these are some of the
longest-lived atmospheric pollutants. The gases have global warming
potentials that are 6,500 to 9,200 times higher than carbon dioxide. The
emission of one kilogram of tetrafluoromethane would have the same climate
change effect, over the subsequent 100 years, as 6.5 metric tons of carbon
dioxide. ("Greenhouse worries for the aluminum industry," Energy, Economics
and Climate Change, Jan. 1992; Harnisch et al.)
The MIT scientists suggested that "in view of the PFCs' atmospheric
stability and their large specific radiative forcing relative to most other
greenhouse gases, increased scientific focus on these compounds is
warranted." (Harnisch et al.)
These two gases are the unintentional byproduct of using fluorine in the
electrolytic reduction of alumina, formed during the "anode effect," when
the electrolyte is depleted.
Harnisch, et al, estimate that each of ton of aluminum production created
about 0.48 kilograms of tetrafluoromethane in 1995. Technological
improvements brought this level down 30 percent from emission rates in the
1980s. Still, the primary aluminum industry generated about 9,400 tons of
this PFC in 1995, or about 90 percent of all tetrafluoromethane emissions
worldwide. This is the global warming equivalent of 59.22 million metric
tons of carbon dioxide.
The MIT study further estimates that in 1992, aluminum smelters emitted
about 1,300 tons of hexafluoroethane, or the greenhouse gas equivalent of
11.96 million tons of CO-2. Primary aluminum production accounted for about
65 percent of this chemical's total emissions; plasma etching in the
semiconductor industry accounted for the balance of hexafluoroethane
emissions..
Proportionally, smelters employing Vertical Stud Soderberg and Sidework
Prebaked technology account for most of the industry's PFC emissions. The
MIT study estimated that in 1995, these two technologies generated 65
percent of emissions even though they accounted for only 30 percent of
production. (Harnisch et al)
The International Aluminium Institute uses a grouping of technologies.
First generation plants built between 1940 and 1955 emit between 12-15
kilograms of PFCs per ton of metal produced; those built between 1955-75
emit 2-6 kilograms per ton; and "third generation plants" (1975-today),
emit from 0.3 to 1 kilogram per ton. (Interantional Aluminium Institute,
"Smelter emissions," on its website, world-aluminium.org)
Hydro power
In addition to greenhouse gas emissions from smelters and captive fossil
fuel-fired power plants, the aluminum industry further contributes to
global warming through its heavy usage of hydroelectric power. In tropical
countries, where smelters have congregated around great dams, massive
amounts of vegetation decay in flooded forests. The decaying organic matter
produces huge amounts of methane and carbon dioxide. In Brazil, one
scientist calculated that a dam over a 50-year period would produce as much
greenhouse gas as a coal-fired plant producing the same amount of power.
(Pratap Chatterjee, "Dams a major source of global warming say scientists,"
Inter Press Service, Nov. 29, 1995)
Aluminum smelters consume over half of the power generated from the Tucurui
reservoir in northern Brazil. The reservoir demonstrated substantial, but
highly variable, greenhouse gas emissions in a recent two year period
studied by the World Commission on Dams. In 1998, it emitted 76.4 tons of
methane and 3,808 tons of carbons dioxide per square kilometer per year.
The next year, these figures dropped to 5.33 and 2,378 tons, respectively.
Estimated emissions for the 2,600 kilometer reservoir totaled 198,640 tons
of methane and 6,182,800 tons of carbon dioxide in 1998.
The WCD concluded that "there is no agreement on whether the net greenhouse
emissions from the reservoir, spillway, and turbines are offset by the
saving in emission from fossil fuel sources made possible by the large
amount of power produced by Tucurui." (World Commission on Dams, "The
Report of the World Commission on Dams," 2000, p. 77, 121, 122)
Aluminum industry lobbying
In 1997, 39 heavily industrialized countries, collectively called "Annex B"
countries, committed to reduce greenhouse gases under the terms of the
Kyoto Protocol to the United Nations Framework Convention on Climate
Change. The countries agreed to restrict their emissions over the period
2008-2012 to between 92-110 percent of 1990 levels. For emissions of PFCs,
hydrofluorocarbons (HFCs), and sulfur hexafluoride, countries may set the
baseline date at 1995.
The aluminum industry is fighting governmental actions to restrict their
greenhouse gas emissions. In 1999, the Aluminium Federation in the U.K.
worked against a Climate Change levy. According to Mining Annual Review,
"the primary smelting industry was exempted and some other modifications
were made, but the Aluminium Federation said that the bill would hurt
Britain's non-primary aluminium industry and that they would prefer a levy,
such as in the Netherlands, based on deviation from benchmarked best
practices." (Stephen Johnston, "Aluminium," Mining Annual Review, March
2000)
In Europe, seven producers -- Alcoa, Alcan, alusuisse (now part of Alcan),
Hoogovens (now part of Corus), Hydro, Pechiney, and VAW -- launched an
"Aluminium for Future Generations" initiative in 1998. In meetings with
government officials, parliamentarians, academic institutions, and
non-governmental organizations, the aluminum alliance emphasizes the need
for voluntary, not mandatory, action. "In many countries across Europe the
industry has entered into a range of national voluntary agreements to
reduce greenhouse gas emissions, since it believes that the reduction of
emissions can best be achieved through a combination of voluntary
agreements and market-based flexible mechanisms," reads the alliance's
website. "The aluminium industry is particularly concerned to adopt a
global approach to the issue of climate change and has therefore been
involved in discussions regarding implementation of the Kyoto Protocol at
international level, through the International Primary Aluminium
Institute." (Aluminium for Future Generations at
http://www.eaa.net/pages/fut_gen/fut_generat.html)
In the United States, aluminum companies are integral members of the Global
Climate Coalition, an industrial lobby credited with derailing U.S.
activism on the issue. Members include Kaiser and The Aluminum Association,
which is a U.S. lobbying group whose members include Alcoa, Alcan, Hydro,
Kaiser, Ormet, Pechiney, VAW, and dozens of other companies. (Boycott
Global Climate Coalition Companies (GCC) at
http://www.islandpress.org/earthday/gcc.html; The Aluminum Association at
http://www.aluminum.org/memberslist.cfm/1/7)
In Australia, David Coutts, executive director of the Australian Aluminium
Council outlined the industry's case at a government-sponsored conference
on climate change in 1999. "Greenhouse gas levels are still well within
historical boundaries and likely to remain there for a considerable time,"
he said. "The science of how these rising levels will effect the climate is
still far from clear and high priority needs to be given to improving that
knowledge so we can best judge how to act."
Coutts praised the government for standing by the industry during Kyoto
negotiations. To its great credit the Australian Government understood
these messages and took a firm position to Kyoto," he said. "Against all
the odds, a relatively sensible outcome was achieved at Kyoto. The
Australian negotiating team played a key role in this outcome and the
resources sector gave them the highest praise for this achievement. The
protocol is not going to immediately solve the problem of rising greenhouse
gas levels but at least it has put in place a process to start doing
something realistic about it."
He emphasized the importance of the aluminum industry to Australia's
economy. "If a favorable investment climate for Australia is maintained
then the alumina and aluminium metal sectors could easily grow by more than
30% in the period through to 2020," he predicted. "The aluminium industry
is already Australia's second largest export industry, with exports
predicted to be well over $5 billion in 1997/98. The industry is the world
leader in bauxite and alumina and the third largest metal exporter-after
Russia and Canada-and we are not all that far behind them with the latest
expansions at Boyne Island and Tomago.
"This expansion will be difficult to achieve if the competitiveness of
Australia is eroded. It depends on competitive supplies of raw materials
and world competitive energy, especially electricity. Australia is
currently at the lower end, on average, of the smelter cost curve and is
the world's most efficient region when it comes to converting electricity
into aluminium. These achievements have been hard won and could be all too
easily eroded," he continued.
"If we put the expansion of the aluminium industry at threat in Australia
by forcing energy costs up, then new investment will be in countries such
as India and China; probably operated less efficiently than in Australia;
and more than likely using Australian coal for electricity generation.
That won't help the greenhouse global problem but it surely will harm the
Australian economy," Coutts concluded. (David Coutts, "Greenhouse beyond
Kyoto issues, opportunities and challenges: The resources industries
perspective," March 31, 1998, at
http://www.brs.gov.au/social_sciences/kyoto/greenh.html)
Annex B countries host about 70 percent of world aluminum capacity, which
is not addressed at all under the current Protocol
In 1997, an article in The Guardian echoed Coutts' claim that the
Australian "government has presented industry lobby interests as synonymous
with the national interest. The green stance of the public has been
systematically eroded through a well-orchestrated campaign to portray
global warming as little more than a theory that scientists can't agree on.
Their strategy was aimed at crippling the impetus for government action to
solve these problems because such action might adversely affect corporate
profits." (Sharon Beder, Paul Brown and John Vidal, 'Who Killed Kyoto?',
The Guardian, Oct. 29, 1997)
VIII. Energy
Aluminum smelters congregate around sources of inexpensive energy. This is
the inevitable outcome of an industry that consumes enormous amounts of
power; on average, 45% of the cost of aluminum smelting is electricity. .
According to the Worldwatch Institute, the world's aluminum industry
consumed almost as much power in 1990 as the entire continent of Africa.
As energy resources become squeezed in the industry's cradles -- along the
great rivers of the northwestern United States and the depleted coal seams
of Western Europe -- production is shifting to the Third World. Powerful
rivers in South America and Africa, coal mines in eastern India, and oil
fields of the Middle East are beginning to fuel the increasing global
demand for aluminum.
The industry's hunger for power produces engineering marvels, tragic
disparities, and ecological devastation. In places like Suriname,
powerlines en route to smelters tower over new communities inhabited by
indigenous people forced to move from homelands flooded by new
hydroelectric dams. As seen in Chapter XXX, an industry that has built some
of the world's largest dams can not be bothered with compensating people
who were forced to move out of its way.
Power mix
The production of a ton of aluminum consumes between 14 and 18.5
megawatt-hours of power. (Alcan 10-K, FY1999) Harnisch et al estimate that
in 1985, the industry's power sources were 57% hydro-electric, 33% coal, 5%
nuclear, 4% gas, and 1% oil. Existing smelters are likely to continue with
the same power sources. The MIT scientists projected that coal could power
between 25 and 75% of new capacity built through 2030. (Harnisch et al,
1999)
The International Aluminium Institute asserts that "more than 55 percent of
the world's primary aluminum is produced using hydro-electric power" and
that this percentage "will be maintained for the foreseeable future." The
industry institute's survey of new smelters that are due to come on line in
the next eight years found that "at least 55% will be hydro powered, a
maximum of 30% coal fired and 15% gas." (IAI, "Energy Use" and "Future
Electricity Supply" at world-aluminium.org)
Focus: The Pacific Northwest Power War
Deregulation of the electricity industry in North America began wreaking
havoc in the western USA in 1999 and 2000. This chaos has ties to the
aluminum industry. The construction of massive dams corresponded with the
proliferation of aluminum smelters in the Pacific Northwest. Aluminum
companies own or hold purchasing contracts for many of these dams. Some
smelters have closed when corporations found it more profitable to sell
power earmarked for their operation on the open market.
Aluminum companies have long benefited from generous relationships with
Pacific Northwest power producers. Alcoa held a monopoly in the Pacific
Northwest in the early 20th century after it secured provisions in its
contracts with hydroelectric suppliers that "made power available to
(potential) rivals at entry-forestalling prices. This practice ceased under
the terms of a 1912 consent decree," according to Arkansas State University
economist Dr. Christopher Brown. (Dr., Christopher Brown, Department of
Economics & Decision Sciences, Arkansas State University, "Alcoa and
beyond: Toward a 'structural' approach to section 2," at
http://www.clt.astate.edu/crbrown/alcoa.htm)
More smelter operators rushed into the northwest U.S. in the 1930s and
1940s. "The aluminum plants are here because there was cheap power" said
James Wright of the Seattle Post-Intelligencer. "During the Depression, the
Works Progress Administration, the government, built a series of
hydroelectric dams -- Grand Coulee, the Columbia, the Bonneville Dam on the
lower Columbia -- and that brought the aluminum plants here during the war,
because none of the other materials used in the manufacture of aluminum are
found in the Northwest. It's all brought here. What we offer is cheap
electricity. If we can't offer that, there's no sense making aluminum
here." ("James Wright discusses how some northwest aluminum companies are
reselling contracted electricity and making profits," All Things
Considered, National Public Radio, Jan. 12, 2001)
Smelter operators are trying to maintain their advantageous arrangements
with the government-owned Bonneville Power Administration (BPA). The BPA
operates 29 dams in the Columbia and Snake river basins, and sells its
power to utilities and large industries in Idaho, Oregon, and Washington,
and parts of California, Montana, Nevada, Utah and Wyoming. (Lynda Mapes,
"BPA caught in a crunch, Energy crisis sours Northwest's sweet deal with
Bonneville," Seattle Times, Jan. 29, 2001)
In 1999, Alcoa, Kaiser, Reynolds, Vanalco, and Columbia Falls Aluminum sued
the BPA as a 20-year pact neared expiration. They disagreed with the BPA's
power allocations in new five-year contracts scheduled to begin in October
2001. Alcoa and Vanalco "took a novel approach, claiming first amendment
rights to redress grievances with the US Government," reported Mining
Annual Review (March 2000).
The suits failed. By January 2001, all of the producers reluctantly signed
new five-year contracts with the BPA. The agreement allocates 1,486
megawatts of BPA's hydroelectric power to the seven companies, roughly half
of their combined requirement. The contract charges the producers $23.50
per megawatt hour. ("Unhappy aluminum smelters ink BPA power deals,"
Purchasing, Jan. 11, 2001)
Reynolds said the contract would increase its BPA purchase rates by 13%
over the previous contract that covered the years 1981 to 2001. Kaiser said
its BPA energy prices would rise by 20%. (Reynolds 10-K, FY1999; Kaiser
8-Q, fourth quarter 2000)
The new contract still guarantees aluminum producers some of lowest-priced
power in the United States. The deal sets prices at about one-half the
average U.S. per-megawatt hour charge on the national market. (Seattle
Times, Jan. 29, 2001)
Some companies have the right to resell BPA power until the current
contract expires in September 2001. Beginning in the summer of 2000, as
energy prices soared in the Western U.S., these companies started to close
smelters and re-sell BPA power.
In June 2000, Alcoa announced that it was halting production at its
121,000 metric ton smelter in Troutdale, Oregon. It agreed to sell some
power back to the BPA at a reduced rate. (Alcoa, Form 10-Q, submitted to
U.S. SEC, Oct. 20, 2000; Susan Kelleher, "BPA wants Kaiser to share
millions," Seattle Times, Feb. 1, 2001)
In western Montana, Columbia Falls Aluminum closed its smelter, and is
reselling its power. It has agreed to forward 25% of the power sales
proceeds to the BPA. Six hundred workers are idle, but Columbia Falls has
agreed to maintain their salaries and benefits through 2001. (Kit
Miniclier, "Electric sellback in Mont. a model Factory will shut; workers
still paid," Denver Post, Jan. 25, 2001)
Golden Northwest is selling power from electricity designated for its
smelters in The Dalles, Oregon, and Kilimat County, Wash. It estimated the
sales would earn about $400 million through September 2001 Golden has said
that 25% of its revenues from the sales will be passed along to the BPA.
Another 25 to 50% of the revenue will develop a gas turbine and possibly a
wind power plant for a replacement secondary smelter. The moves earned the
support of the plant's union and the BPA. (Hal Bernton, "Jobs meltdown:
Goldendale smelter slashes aluminum production in order to resell its BPA
power," Seattle Times, Feb. 4, 2001)
Kaiser has made no such pledges to channel energy sales profits to the BPA,
its laid-off workers, or the development of alternative power plants.
Beginning in June 2000, the company curtailed production at its Tacoma and
Mead, Wash., smelters and sold power on the open market. The sales, which
could earn Kaiser $500 million until the contract expires in October, have
provoked outrage from the plant's workers and the BPA.
"It's difficult to conceive of a circumstance that would prevent them from
coming to terms with the region's other ratepayers and their employees,
given the amount of windfall profit," said BPA spokesman Ed Mosey in
January 2001. The agency is contemplating turning off its power supply to
Kaiser in October. (Seattle Times, Feb. 4, 2001)
"There's no way they should be profiteering from reselling federal power
and then ask us to draw unemployment," said Wayne Bentz, who represents
Kaiser Mead smelter workers as Steelworkers Local 329 steward. Over 900
workers are unemployed due to Kaisers' shutdown. (John Stucke, "Kaiser
denies idled workers' wage request," Spokesman-Review, Jan. 31, 2001;
Seattle Times, Feb. 1, 2001)
Kaiser Vice President Pete Forsyth called the BPA demands unreasonable and
"said the money is really a savings account that the company will have to
drain to buy a much more expensive supply of power starting this fall,"
according to the Spokesman-Review. (John Stucke, "Kaiser ponders asset
sale," Spokesman-Review (Spokane, Wash.), Feb. 2, 2001)
BPA was forced to buy back power for more than 20 times than it cost the
agency to produce it, according to the Seattle Times. Under the 1996-2001
contract, Kaiser pays BPA $22.50 per megawatt-hour. In late 2000, the open
market price in the western U.S. soared as high as $750 per megawatt-hour.
(Seattle Times, Jan. 29 and Feb. 1, 2001; Denver Post, Jan. 25, 2001)
Other shutdowns
Aluminum companies have shut down smelters to sell their electricity
allocations in other places. In the summer of 1999, skyrocketing
electricity prices in the midwestern U.S. led Alcan and Southwire to
curtail production at their Sebree and Hawesville smelters and sold their
captive power (105 and 90 megawatts, respectively) to the grid. (Stephen
Johnston, "Aluminium," Mining Annual Review, March 2000)
In May 2000, Ormet announced that it would limit production at its
Hannibal, Ohio, smelter during the summer and would lay-off, temporarily,
270 workers. "This is an endeavor that no other company in our industry has
been able to accomplish," said Emmett Boyle, chairman, president and CEO of
Ormet Corporation. "This will make us a more competitive force and will
strengthen our company's position in the future. We will continually review
the value of selling power to determine if it's a healthy business venture
for the company. We'll be looking for a proper balance of energy and metal
sales that will ultimately strengthen the company's portfolio."
"The decision to curtail aluminum production at this time ultimately came
down to three economic factors which include extremely low aluminum prices,
higher than usual alumina prices and higher electrical energy prices in the
peak summer months," explained a company press release. (Ormet, "Ormet
Announces Plans to Curtail Aluminum Production, Sell Power and Alumina,"
company press release, May 18, 2000)
Ramifications of electricity deregulation in the U.S. reaches across the
border into the Canadian province of British Columbia. In late 2000, Alcan
announced plans to shut down three potrooms in its Kitimat Works. The
plant's union, Canadian Auto Workers Local 2301, said the shutdown is the
result of provincial and corporate "greed."
"This whole situation stems from the government's 'greed' of making huge
profits by selling power across the border and Alcan's never ending
'Corporate Greed' of maximum profits no matter who or what it affects," the
CAW local asserted in a Dec. 14, 2000, statement. "The sad part is that our
members are being used as pawns in this battle. The closing of these lines
would have a huge impact on the community and is a direct attack on the
integrity of our local union 'Alcan must be stopped' for the sake of our
union brothers and sisters whose jobs will be affected. If we don't stop
this now who knows, maybe next year more jobs will be eliminated. If the
price of power is right! ("Union Says "No" to Line One Shutdown," CAW Local
2301, Dec. 14, 2000)
"If Alcan committed to a bad power deal they should pay the price. Our
members, and our community should not have to be the ones that pay the
ultimate cost. When times were good, Alcan didn't mind reaping all the
additional profits for the last few decades on the surplus power. Yet now
when fortunes turn temporarily around, they don't want to put any of that
'surplus' back into Kitimat Works to save jobs. We remind Alcan that it
also has a commitment to our community as well. Not just their profitable
power commitment with BC Hydro," added the CAW local. (ibid)
The situation marked a quick turnaround by the BC government. As recently
as December 1997, BC's premier "invited producers to build smelters in the
province with an offer of cheap electricity," according to the Mining
Journal (June 5, 1998)
Hydro
Hydroelectric dams have fueled the proliferation of aluminum smelters in
other parts of the world, often at the expense of local communities. As
Joji Carino of the World Commission on Dams reported in 2000, "The
experience of indigenous peoples and ethnic minorities with dam projects is
rife with alienation, dispossession both from their land and other
resources, lack of compensation or inadequate compensation, human rights
abuse and lowering of living standards." (Joji Carino, "Review of
Hydroelectric Projects and the Impact on Indigenous Peoples and Ethnic
Minorities," World Commission on Dams, 2000)
Details on the relationships of smelters to some massive hydroelectric
projects follow.
Brazil
The Brazilian aluminum industry tripled in size from 1978 to 1985, when the
Tucurui dam was completed in the Amazon. The dam, created a 2,500 square
kilometer lake and spawned the Albras, Alumar, and Alunorte alumina
refinery and aluminum smelters owned by Alcoa, Alcan, Billiton, and a
consortium of Japanese companies. These aluminum operations consume over
half of the dam's power. (Latin American Newsletters, Nov. 23, 1984;
Financial Times, Nov. 16, 1995)
The Brazilian government,
An IPS/SEEN/TNI report
2001
I. Table of contents
II. Executive Summary
III. Aluminum production infrastructure
IV. Corporate control
V. Multilateral and bilateral financial institutions' support
VI. Human rights
1. Impact of bauxite mining on indigenous peoples
Sidebar: The impending death of Mulanje Mountain
2. Aluminum wars (Tajikistan, Sierra Leone, etc.)
3. Workers rights and dirty industry migration
VII. Environmental health
1. Cancer in beluga whales
2. Impact of emissions on workers and communities
a. Coal tar fumes and PAH
b. Fluoride
c. Red Mud
d. Other emissions
3. Global warming
a. Perfluorocarbons
b. Carbon dioxide
c. The industrial lobby
VIII. Energy
1. Hydro
a. Great dams
b. The Pacific Northwest power war
2. Coal
3. Gas
4. Geothermal
5. Nuclear
Appendices
I. World bauxite production tables
II. World alumina refinery tables
III. World aluminum smelter tables
IV. Maps and photos
II. Executive summary
Aluminum holds a pretty positive image in the global marketplace. The
metal's shiny exterior glimmers like an antidote to its heavyweight
competitor, steel, or its lightweight, cheap-feeling counterpart, plastic. It holds this image despite the earth- and bone-shattering reality of its production.
From the devastation of some of the planet's most wondrous features, like Mulanje Mountain in Malawi and the beluga whales of Canada's St. Lawrence River, to the uncommon death rates of its employees and neighbors, to the global climactic consequences of its emissions, the aluminum industry churns a dark existence behind its shining exterior.
This report examines the global structure and social and environmental
impacts of an industry that deserves great scrutiny. Corporations engage in the mining of bauxite, the refining of alumina, and the smelting of aluminum with a reckless abandon that rivals anything done by more-infamous chemical and fossil fuel industrial forces. The industry's impacts span the spectrum of human and environmental abuse.
Corporate control
A handful of companies -- Alcoa, Alcan, Billiton and Norsk Hydro --
orchestrate most of the industry's global activity. Transnational
corporations participate in more than 60 percent of the world's bauxite
production. Alcoa alone controls more than one-third of the world's alumina production. These companies hold large stakes in each crucial step of the production cycle. Alcoa and Alcan absorbed leading competitors in the year 2000, awakening historic fears of monopolism.
Corruption and struggles (fiscal and physical) run rampant in the other
concentrated sphere of production, the countries carved from the former
Soviet Union.
Dirty Industry Migration
As with many dirty industries, production is increasingly concentrated in the global South. With energy and labor prices escalating in the
industrialized West, new capacity almost always is proposed in the
developing world.
Bilateral and multilateral development banks are helping to fuel this
industrial flight. The World Bank and national lenders have financed, or plan to back, aluminum industry infrastructure privatization or
construction projects in Armenia, Azerbaijan, Brazil, Cameroon, China,
Egypt, Ghana, Guinea, Guyana, Indonesia, India, Kazakhstan, Malawi,
Mozambique, Oman, Russia, Tajikistan, and Turkmenistan. These institutions' $4.4 billion in financial aid to developing countries mainly benefits western transnational corporations.
One multilateral government arm, the European Bank for Reconstruction and Development, even financed the export of the dirtiest type of aluminum technology -- a Soderberg smelter -- from an aging smelter in Slovakia to a new one in Iran.
Resettlement
The extraction of natural resources, aluminum's fodder, begins the
industry's ecological and human toll. While mining bauxite, lignite, and coal, and damming rivers, aluminum corporations have erased villages where tens of thousands of people once lived. Long-time residents of countless communities have been forced to move and make way for aluminum giants' new strip mines, dams and water courses.
Most bauxite mining occurs in tropical regions peopled by indigenous
communities, from northern Australia to South America to west Africa.
In the eastern Indian state of Orissa, indigenous communiities have been trying to stop the construction of the world's largest new bauxite mine and alumina refinery complex. In December 2000, police allegedly shot and killed three men who lived in a village where people refused to move out for Norsk Hydro and Alcan's Utkal project.
In Brazil, the construction of the Tucurui dam displaced more than 25,000 people. More than half of the power generated by Tucurui goes to aluminum smelters in northern Brazil. The new reservoir impacted an estimated 100,000 people who drank and fished the river and farmed along the riverbed. After the reservoir was filled in 1984, a prolific outbreak of mosquitoes forced farm families close to the new reservoir to leave their homes. The reservoir also helped to concentrate mercury discharges from upstream gold mining operations in fish tissues.
In Surinam, 6,000 people were forced to move from their ancestral
communities in the tropical rainforest to make way for an Alcoa/Billiton dam and smelter. A proposed new dam for a smelter in Sarawak, Malaysia, could force the resettlement of 10,000 indigenous people.
Dr. Kua Kia Soong, head of a non-governmental coalition in Sarawak,
wondered, "Why do we want toxic and energy-hungry industries such as
aluminum smelters? Aluminum smelting is one industry that the developed
countries want to dump on suckers like us because it is environmentally
toxic and it consumes voracious amounts of energy."
Power Hunger
Smelters aggregate around sources of cheap energy, because 45% of the cost of aluminum smelting is electricity. These factories have concentrated around the world's vastest sources of energy: massive power-producing dams, rich seams of coal, gas fields in the Middle East, and geothermal fields in Iceland.
The industry's hunger for power produces engineering marvels, tragic
disparities and ecological devastation. In places like Surinam, powerlines en route to smelters tower over new communities inhabited by indigenous people forced to move from homelands flooded by new hydroelectric dams. In small countries like Tajikistan, Bahrain, and Ghana, smelters consume a third or more of the national power supply.
Some aluminum companies have threatened to close their smelters in regions where energy prices are skyrocketing, like the Pacific Northwest. Alcan and Alcoa idled smelters in Oregon and British Columbia as prices soared in 2000 and 2001. Where aluminum producers own electricity, they have cut aluminum production to sell power to the grid when prices are high.
"More jobs will be eliminated... if the price of power is right," predicted a Canadian Auto Workers local union in December 2000.
Cheap Labor
Labor is the industry's second most costly expense. Many of the biggest
companies simultaneously increase profits and lock out restless workers. Transnationals replace lost production from shuttered smelters in the West by maximizing production at cheaper factories in places like Mozambique, where Billiton pays most workers less than 30 cents per hour. Shortly before the Mozambique smelter began production, Billiton announced plans to lay off 5,000 workers from its older and better organized smelters in South Africa.
Aluminum industry laborers, wherever they work, face severe on-the-job
health risks. Smelter potrooms are a particularly hazardous workspace. At an Alcan smelter in British Columbia, Canada, over 20 workers have been disabled by or died from on-site exposures to cancerous emissions.
Since the late 1970s, scientists have correlated elevated bladder cancer rates in smelter potroom workers. In 1989, Alcoa told an Australia newspaper that it "emphatically rejects" any such risk for smelter workers. In 1999, Alcoa finally sent warnings to thousands of its workers worldwide that "a small increase in cancer could be expected at lower levels of exposure than had previously been expected."
Ecological Toll
The industry also exacts steep tolls from surrounding communities and
ecosystems. Fluoride emissions from the Nalco smelter in India plague local villagers with brittle bones, tooth and gum diseases, and lumps of dead skin. Their cattle, more prone to fluoride contamination, commonly suffer from bone deformities and rising death rates. In one village within a kilometer of the plant, the local herd of cattle dropped from 3,000 to 100 head in a ten year period. Similar symptoms of fluorosis are apparent in villages around the world's fourth largest smelter, in Tursunzade, Tajikistan.
A Quebec, Canada, region that hosts four Alcan smelters has the highest
birth defect rate in the country. It leads the province in deaths caused by malignant tumors. Biologists have connected emissions from these smelters with cancers in beluga whales downstream in the Saint Lawrence Estuary.
Global Warming
Aluminum smelters' emissions have a truly global impact. A recent study
found that the industry emits about 1 percent of global emissions of
man-made greenhouse gases. The industry is a significant contributor to
global climate change for two reasons: (1) it consumes enormous amounts of energy, much of it fossil fuels such as coal, that release carbon dioxide when burned and (2) smelters produce small quantities of extremely potent greenhouse gases.
The aluminum production cycle generates an estimated 12 tons of carbon
dioxide per ton aluminum produced. Total carbon dioxide emissions are
predicted to rise from about 2 billion tons in 1985 to about 3 billion tons by the year 2003.
Roughly one-third of aluminum's electricity is generated by burning coal. In addition to producing carbon dioxide emissions from captive fossil fuel-fired power plants, the industry further contributes to global warming through its heavy usage of hydroelectric power. In tropical countries, where smelters have congregated around great dams, massive amounts of vegetation decay in flooded forest. Carbon dioxide and methane emissions from the new tropical reservoirs may contribute as much greenhouse gas as would a fossil fuel plant that would produce the same amount of energy, according to a recent World Commission on Dams study. Dams fuel 57% of global aluminum production.
Smelter potrooms produce the industry's other main contribution to climate change: perfluorocarbons (PFCs). Smelters are responsible for 90 percent of all tetrafluromethane, and 65 percent of all hexafluoroethane emissions worldwide. These PFCs have global warming potentials that are 6,500 to 9,200 times higher than carbon dioxide.
These and other realities did not deter the fiscal optimism of Alcoa
chairman Paul O'Neill in 1999. "I don't see environmental issues as a
negative for aluminum or Alcoa," he said. "As long as legislatures and
governing bodies don't do stupid things, we'll be fine." Mr. O'Neill is now the U.S. Secretary of Treasury under President George W. Bush.
III. Aluminum production infrastructure
The aluminum industry begins with bauxite mining. About 85 percent of all the bauxite mined worldwide is refined into alumina. More than 90 percent of refined alumina is then consumed in aluminum smelters. (Patricia Plunkert, "Bauxite and Alumina-1999," U.S. Geological Survey, 2000)
Bauxite mining is the only step in aluminum production that can not shift: the subsequent steps, refining bauxite into alumina, and turning alumina into aluminum, can and do bound across the world in search of the cheapest costs.
After the bauxite is mined at a handful of mines, aluminum oxide --
commonly called alumina - [is added] at a few dozen plants. Then, production moves on to scores of aluminum smelters, where an electrolytic process ("reduction") removes oxygen from the alumina. The resultant molten primary aluminum is then cast and shipped to fabricating plants. Generally, one ton of aluminum is produced from two tons of alumina, which is produced from five tons of bauxite.
Reduction demands enormous amounts of electricity. And so, these smelters are congregated around some of the world's vastest sources of energy: massive power-producing dams, rich seams of coal, and the gas fields of the Arabian Peninsula (see Energy chapter).
A. Bauxite
Proven and probable bauxite reserves stood at 25 billion tons at the end of 1995, according to the U.S. Bureau of Mines. The actual amount of reserves may be as high as 75 billion tons. Most of the bauxite reserves are in tropical regions, led by South America (33%), Africa (27%), Asia (17%), and Oceania (13%). According to the U.S. Geological Survey, "the sheer magnitude of these reserves is sufficient to ensure a readily accessible supply for the future." ("Bauxite and alumina," U.S. Geological Survey, Sept. 3, 1996; also, Plunkert, 2000)
Bauxite production grew by 13 percent (112 to 127 million tons) from 1994 to 1999. Australia is the largest producer (38%), followed by Guinea (12%). Brazil's share of production grew from 7% in 1994 to 10% in 1999, overtaking Jamaica (9%) for third in global production. Production is also growing rapidly in China and India. (See tables for further details) (European Association of Mining Industries; U.S. Geological Survey)
Most bauxite that is mined is of metallurgical grade, in the trihydrate
form. Non-metallurgical, monohydrate, grade bauxite is used in
refractories. Bauxite is also consumed in the production of abrasives,
cement, aluminum sulfates for water purification, sizing agents for paper manufacture, and other applications. (Africa Resources Corp.)
Although bauxite is almost always the raw material used to produce alumina, other materials are technically-feasible sources. "Clay, anorthosite, alunite, coal wastes, and oil shales, offer additional potential alumina sources. Although it would require new plants using new technology, alumina from these nonbauxitic materials could satisfy the demand for primary metal, refractories," according to the U.S. Geological Survey. (USGS, Sept. 3, 1996)
Labor (34%) and energy (21%) account for more than half of the cost of
bauxite mining. (Africa Resources Corp.)
Alumina and aluminum producers dominate bauxite mining. In 1993,
transnational aluminum companies participated in more than 62% of the
world's bauxite production.
Many bauxite mines are owned by partnerships of transnational aluminum
corporations and the host government. Guinea, Brazil, Venezuela, India,
Indonesia, Turkey, and Ghana hold bauxite mine ownership stakes. (Africa Resources Corp.) Host governments took many of these stakes in a wave of nationalizations in the 1970s. Seven producing countries -- Australia, Guinea, Guyana, Jamaica, Sierra Leone, and Yugoslavia -- banded together to form the International Bauxite Association in 1974. However, Australia's unilateral efforts prevented the IBA from becoming an OPEC-like cartel. (Samir Amin, "Mining in Africa today - Strategies and prospects," The United Nations University, 1988)
Transnational corporate investments in these and new bauxite mines surged in subsequent years.
The Alcoa World Alumina and Chemicals group (AWAC) produces and sells
bauxite and alumina. This joint venture between Alcoa (60%) and Western
Mining Corp. (WMC, 40%) produces more alumina than any other company in the world.
Australia
Australia leads the world in bauxite production, producing about 40 percent of the global total. The main mines, all of which are open pits, are located in Queensland (Weipa), Northern Territory (Gove) and Western Australia (Worsley). Unexploited but vast bauxite deposits are also located in the Mitchell Plateau and Cape Bougainville regions of Western Australia. ("Australian Resources and Deposits," Australian Bureau of Resource Sciences, 2000)
- Weipa (Comalco/Rio Tinto)
The world's largest bauxite mine is located in far north Queensland, in the village of Weipa. Comalco mines about 10 million tons of bauxite a year from this open pit. It has proven ore reserves of 296 million tons, probable ore reserves of 109 million tons. According to Comalco, another 3.8 billion tons of bauxite may be available. Most of the mined bauxite goes to the company's refinery in Gladstone. One-fifth of the bauxite goes to a refinery in Italy. (Rio Tinto website, "Comalco," at
http://aboriginalrelations.riotinto.com/nde/sites/comalco/)
- Worseley (Billiton)
Billiton gained control over the bauxite and alumina complex in Worsley, Western Australia, in late 2000. Benefiting from a U.S. Dept. of Justice-ordered sale of Alcoa/Reynolds alumina production capacity,
Billiton added Reynolds' 56% controlling stake to its 30% existing share in Worsley. The $1.2 billion acquisition gave Billiton a mine with over 50 years of bauxite reserves. Mining has expanded to accommodate an expansion at the accompanying alumina refinery.(Commerzbank Securities, "Billiton company report," August 30, 2000)
- Gove (Alcan/Billiton)
Algroup (now a part of the Alcan conglomerate) holds a 70 percent share
that controls the Gove bauxite and alumina complex in the Northern
Territory of Australia. Billiton owns a minority stake, which it purchased from CSR Ltd. in March 2000. AMP Ltd. owns a small share of the complex.
The alumina refinery is being expanded from 1.8 million tons of annual
capacity to 2 million tons. Two million tons of bauxite are exported rather than refined in Gove. (Billiton, "Billiton and CSR sign heads of agreement on Gove Aluminum Ltd.," press release, March 16, 2000)
-Ely (Alcan)
Alcan and Comalco plan to develop a bauxite mine in Queensland. In 1998, the two companies agreed to exploit the Ely mine owned by Alcan in Cape York, in conjunction with Comalco's adjacent operations, beginning in 2000. (Alcan 10-K, FY1999)
Brazil
In Brazil, the world's biggest aluminum companies are partners in the main producing company, Mineracao Rio do Norte. MRN's main operation is the Trombetas mine in the Amazon.
MRN is owned by CVRD/Aluvale of Brazil, 40%, Alcoa/Reynolds, 18.2%,
Billiton. 14.8%, Alcan, 12%, Companhia Brasileira de Aluminio, 10%, and
Norsk Hydro 5%. The Brazilian National Development Bank is planning to sell its 20% stake in CVRD (Companhia Vale do Rio Doce). MRN is planning to expand bauxite production from 11 million to 14.5 million tons per year. (Mining Annual Review, March 2000; Alcoa 10-K, FY1999; Alcan 10-K, FY1999)
Alcoa also owns an interest in an undeveloped bauxite reserve in Brazil
(Reynolds 10-K, FY1999)
Ghana
Alcan owns 80% of Ghana Bauxite Co., which shipped 400,000 tons of bauxite to Alcan's Burntisland (Scotland) and Jonquiere (Quebec) alumina refineries in 1999. (Alcan 10-K, FY1999)
Greece
Greece is the largest bauxite producer in Europe, and the 12th largest in the world, accounting for 2% of global production. The country holds 150 million tons of reserves and mined 2.45 million tons in 1996. Most is mined by Pechiney subsidiary, Aluminum of Greece. Most bauxite is consumed by Aluminum of Greece's alumina refinery. The company, which also operates an aluminum smelter, is the largest heavy industrial firm in Greece. ("Bauxite," Athens News Agency, Feb. 1998)
Guinea
Guinea, which trails only Australia in bauxite production, holds an
estimated 20 billion tons of bauxite, or about one-third of the world's
reserves. Mining takes place through three companies: Compagnie des
Bauxites de Guinee (CBG), Friguia, and Societe des Bauxites de Kindia
(SBK). ("Guinea: Africa Review," Africa Review World of Information, March 1998)
- CGB
CGB mined an estimated 12.15 million tons of bauxite in 1999. It is a joint venture between the government (49%) and the Halco consortium (51%). CGB holds a 10,000 square mile concession to develop and mine bauxite in northwestern Guinea, through the year 2038.
Halco investors include Alcoa (which now manages CGB), Alcan, Pechiney,
Comalco, Reynolds, and VAW. Open pit mines include Boke, Sangaredi,
Bidikoum, and Silidarou. Materials flow from the pits to the massive Kamsar crushing and drying plant. CGB started mining bauxite in 1973. (Leslie Wright and Morcire Sylla, "Guinea," Mining Annual Review, March 2000; Reynolds 10-K, FY1999)
Bauxite from CGB supplies Alcoa's refineries in Pt. Comfort, Texas, and San Ciprian, Spain, Alcan's refinery in Jonquiere, Quebec, the Sherwin, Texas, refinery formerly owned by Reynolds, and a refinery in Stadt, Germany, owned by VAW. (Alcoa 10-K, FY1999; Alcan 10-K, FY1999)
- Friguia
Friguia, the second largest producer (2.3 million tons of bauxite mined in 1999), has operated as a 49% government/51% private joint venture named Frialco. Pechiney, Noranda, Alcan, and Hydro have been investors in Frialco. The company name is changing to Alumina Co. of Guinea (ACG).
Friguia owns the only alumina refinery in West Africa. (Mining Annual
Review, March 2000; "Bauxite boost for Guinea," Mining Journal, Feb. 25, 2000 )
In 1999, Reynolds reportedly attempted to purchase a 100% stake in Friguia. According to African Mining Monitor, "the sale would be in the form of a lease of management scheme, enabling the investor to manage and modernize the assets without getting involved with the social concerns of the place."
Reynolds reportedly wanted to secure Friguia bauxite for the Alscon smelter in Nigeria and Volta smelter in Ghana, in which Reynolds holds 10% stakes. ("Reynolds Metals negotiating with Guinean government," African Mining Monitor, April 6, 1999)
In July 1999, Reynolds and the government reached a memorandum of
understanding in which Reynolds would manage the Friguia refinery. (Mining Annual Review, March 2000)
Friguia of Guinea also operates a bauxite mine in neighboring
Guinea-Bissau. It is planning to double production at this mine to 710,000 tons per year, at a cost of $70 million. ("MBendi Profile: Friguia," at http://www.mbendi.com/proj/p0d6.htm)
- SBK
The third largest Guinean producer, SBK, mined about 1.5 million tons of bauxite in 1999. It is studying granting control to Africa Mining Services (a project of Eltin-Ausdrill) and Shell. (Mining Annual Review, March 2000)
In 2000, SBK formed a partnership with Siberian Aluminium to develop the Bolondugu bauxite mine. Siberian Aluminum (Russwia) holds a large stake in the Nikolayev Alumina Plant in Ukraine, which is a long-time importer of Guinean bauxite. ("Siberian Aluminum to mine bauxite in Guinea," Interfax Russian News, March 22, 2000; "Siberian Aluminium to develop Guinean bauxite deposit," African Mining Monitor, April 3, 2000)
Guyana
Guyana's government is planning to privatize its two bauxite companies,
Berbice Mining Enterprises (Bermine) and Linden Mining Enterprise
(Linmine). The privatization would open 60% majority stakes to help fund capital improvements at both facilities. (Plunkert, 2000)
Reynolds, now owned by Alcoa, holds a 50% stake in the Bermine operation, and purchased 2 million tons of bauxite from the enterprise in 2000. (Reynolds 10-K, FY1999)
Hungary
A new bauxite mine is planned in Bakoyoszlop, Hungary. The open pit mine, operated by Bakony Bauxite Mines, could produce more than 650,000 tons per year from reserves of 4.4 million tons. (Plunkert, 2000)
India
India, particularly the state of Orissa, is poised to become one of the
world's leading producers of bauxite and alumina. The largest pending
project, the Utkal partnership, is discussed in depth in the human rights chapter of this report. Utkal is a $1 billion venture between Norsk Hydro (45%), Alcan (35%) and Alcan's subsidiary, Indal (20%), in the state of Orissa.
Indal, the Alcan subsidiary, also owns and operates bauxite mines in
Chandgad and Lohardaga. (Alcan 10K, FY1999)
Nalco plans to double its bauxite mining to 4.8 million tons per year.
(Mining Annual Review, March 2000)
Jamaica
Transnational corporations have long dug bauxite out of this Caribbean
country.
In Jan. 2000, Kaiser, Hydro, Alcoa and the Jamaican government agreed to share costs and production at the Alpart and Clarendon operations.
Kaiser and Hydro held 65 and 35 percent shares in Alumina Partners of
Jamaica (Alpart), which mined 3.6 million tpy from the Discovery
Bay/Manchester Plateau region. Alcoa and the government were in a 50/50
joint venture, called Jamalco, that runs a 2 million tpy mine in Clarendon Parish. (Plunkert, 2000; Alcoa 10-K, FY1999)
A 1999 explosion at Kaiser's alumina refinery in Louisiana led Alpart to severely curtail production at Alpart's Discovery Bay operations. About 3.3 million tons of bauxite per year from this mine were destined for the Louisiana refinery.
In early 2000, Alcoa contracted the Jamaican government to produce 400,000 tons of bauxite per year for its Point Comfort, Texas, refinery. ("Govt. secures bauxite deal," Caribbean Update, Feb. 1, 2000)
Russia
Severalboksitruda is the largest bauxite producer in Russia, accounting for 70 percent of the country's production. It started digging an open pit in Olkhovskoye in 1999 and announced plans to start production from a new deep mine, in Novo-Kalinskaya, in 2003. Bauxite mined by this company is mainly sold to the Bogoslovsk aluminum works. (Plunkert, 2000)
Suriname
Alcoa mines bauxite in Suriname through its subsidiary, Suriname Aluminum Company (Suralco). Alcoa also owns a 24% share in a separate mining operation, in Moengo, controlled by Billiton. According to Alcoa's 1999 annual report, "Suralco expects to deplete the current mine reserves at both operations in the period 2005-2010." (Alcoa 10-K, FY1999)
Alcoa first mined bauxite in Suriname in 1917. Billiton began mining there in 1942. Through the 1960s, the country ranked as the world's largest bauxite producer. Alcoa (through its Suralco subsidiary) and Billiton have focused on reserves in eastern Suriname.
Now that the two older mines are being depleted, the companies are looking to the west, where they have launched a joint venture to mine the Bakhuis deposit. This deposit is one of the world's largest. ("Maroon Community Petitions Suriname Government about the Operations of a US-owned Bauxite Mining Company," Forest Peoples Programme, September 17, 1998)
United States
Almost all of the bauxite consumed in the United States is mined outside the country. Three companies operated small surface bauxite mines in Alabama and Georgia in 1995, almost all of which was consumed in the production of nonmetallurgical products. Alumina refiners in the United States import about 10 million tons of bauxite annually. The major supplying countries from 1991 to 1994 were Guinea (34%), Jamaica (30%), Brazil (14%), and Guyana (13%). ("Bauxite and Alumina," U.S. Geological Survey, Mineral Commodity Summaries, January 1996)
Vietnam
According to Mining Annual Review (March 2000), in 1999 Pechiney held talks with the Vietnam government about conducting a "prefeasibility study on a bauxite and a one million ton per year alumina joint venture."
Venezuela
The Venezuelan Corporation of Guayana (CVG)'s Bauxilum subsidiary mines
bauxite (4 to 5 million tons per year). (Venezuela Commercial Office,
presentation to Expo 2000 - Hannover at www.venezuelaexpo2000.com/oficina/english/expo_opo_mineria_actores_guayana_en.html)
B. Alumina
Using the Bayer process, trihydrate bauxite is heated and aluminum oxide, a white powdery substance, is formed. The refining process extracts one ton of alumina from about 2.23 tons of bauxite. (Africa Resources Corp.)
Since the 1970s, many alumina refineries have moved from the Western world to the bauxite mines. "This is especially true for the major bauxite production centers of Australia, Brazil, Venezuela and India. In each case, bauxite mines have been developed by one or more of the major integrated aluminum producers. They have found it more economical to convert the bauxite to alumina on-site (or close by) rather than incurring high transport costs," according to Africa Resources Corp.
The global capacity of smelter grade alumina refineries was 49 million
metric tons in 2000. (USA v. Alcoa and Reynolds, complaint filed in U.S. District Court, Washington, D.C., May 3, 2000)
Four countries -- Australia (33%), the U.S., China, and Jamaica -- produced more than 55 percent of the world's alumina in 1999. (Plunkert, 2000)
As with bauxite, aluminum transnational corporations produce most of the
world's alumina. Aluminum producers hold ownership stakes in alumina
refineries that consume about 85 percent of mined metallurgical grade
bauxite. The rest of the bauxite (about 5 million tons) is sold to
refineries in the former Soviet Union or third party companies who pass the material along to Western producers. Kaiser, Pechiney, the new Middle East producers, and refineries in the former Soviet Union are more dependent on bauxite purchases than companies like Alcoa, Alcan, and Billiton. (Africa Resources Corp.)
Before Alcoa and Reynolds merged, Alcoa and Reynolds owned or controlled
14.5 million and 4.4 million tons of this capacity, respectively, or a
combined 38 percent of the global market. (USA v. Alcoa and Reynolds)
Alcoa, the world's leading producer of alumina, owns alumina refineries in Kwinana, Pinjarra and Wagerup, Western Australia; Pocos de Caldas, Brazil; San Ciprian, Spain; St. Croix, Virgin Islands; and Pt. Comfort, Texas.
Alcoa also manages the operations of three alumina refinery joint ventures in which it has an ownership interest: Paranam, Suriname (55 percent Alcoa ownership); Sao Luis, Brazil (54 percent Alcoa ownership); and Clarendon, Jamaica (50 percent Alcoa ownership).
All but the Brazil operations are operated under Alcoa's AWAC partnership with WMC. About 47% of AWAC's production in 1999 was consumed by Alcoa; the rest was sold to third parties. (USA v. Alcoa and Reynolds; Alcoa 10-K FY1999)
Prior to the merger, Reynolds owned an alumina refinery in Corpus Christi, Texas; 56 percent and control of the management of a joint venture alumina refinery in Worsley, Western Australia; 50 percent of a joint venture alumina refinery in Stade, Germany; and managed and was entitled to 10 percent of the production of the Friguia, Guinea alumina refinery. (USA v. Alcoa and Reynolds)
The U.S. Department of Justice has noted the potential for the corporate
giants to fix prices. In its anti-trust complaint that forced Alcoa to sell off some of its alumina refineries last year, it said the market for smelter grade alumina "has certain characteristics conducive to
anticompetitive coordination." The DOJ said the sales were needed to
"ensure that competition will continue." (USA v. Alcoa and Reynolds,
complaint filed in U.S. District Court, Washington, D.C., May 3, 2000; USA v. Alcoa and Reynolds, proposed final judgment, U.S. District Court,
Washington, D.C., May 3, 2000)
Australia
Australia produces more than double the amount of alumina made in the USA, which ranks second. Unlike the USA, most of Australia's refineries consume locally-mined bauxite. The country hosts the world's largest group of refineries (Alcoa's three Western Australia refineries), the largest recent refinery expansion project (Billiton's Worsely refinery), and the largest individual refinery (Comalco/Rio Tinto's Gladstone refinery).
- Alcoa (Kwinana, Pinjarra, and Wagerup)
AWAC's three mining-refinery operations in Western Australia -- Kwinana
(south of Perth) and Pinjarra and Wagerup (in the southwest) -- form the
world's largest source of bauxite and alumina. At the end of 1999, these
operations had a combined alumina production capacity of 7.3 million tons per year. (Alcoa 10-K, FY1999)
The Alcoa/Western Mining operators plan a $550 million project to expand
Wagerup's capacity from 2.2 million to 3.3 million tons.. At Pinjarra, a
retrofitting project is expected to boost production by 165,000 tpy in
2001. (Plunkert, 2000; Bob Regan, "Alcoa mulling 50% capacity expansion at Wagerup refinery," American Metal Market, Jan. 26, 2001; Alcoa 10-K, FY1999)
- Billiton (Worsely)
In October 2000, Billiton took control of the Reynolds alumina refinery in Worsely, Australia, which the U.S. Dept. of Justice ordered sold in the Alcoa/Reynolds merger. It bought Alcoa's 56 percent stake in Worsley for $1.49 billion in cash. ("Billiton scoops giant Australian alumina miner," Financial Post, Aug. 30, 2000)
Billiton now owns an 86% stake in the refinery and nearby bauxite mine in Western Australia. Japan-based Kobe (10%) and Nissho Iwai Corp. (4%) own the balance of the operation.
In the world's largest recent alumina refinery expansion, capacity at
Worsley expanded from 1.9 to 3.1 million tons in mid-2000. According to
Mining Annual Review (March 2000), "the project has been plagued by labor problems and is well over budget.") Another 300,000 tons of capacity may be added. (Commerzbank Securities, "Billiton company report," August 30, 2000)
- Comalco (Gladstone)
In Gladstone, Queensland, Rio Tinto subsidiary Comalco owns and operates
the world's largest alumina refinery. This 3.5 million ton refinery
processes bauxite that Comalco mines at Weipa in northern Queensland. Alcan holds a 21.4% stake in the Gladstone alumina plant. Its share of production is shipped to the Alcan smelter in Kitimat, British Columbia. (Alcan 10-K, FY1999; Rio Tinto website)
Throughout 1999, Comalco deliberated on the sitting of a new Aus$1.4
billion refinery in either Gladstone in Australia, or Sarawak in Malaysia. [See Human Rights chapter] In April 2000, the company decided to focus its feasibility study on adding capacity in Gladstone. ("Comalco Chooses Gladstone as Site for Alumina Refinery Feasibility Study," company press release, April 3, 2000)
Brazil
Alumina production has increased steadily in Brazil, from 2.1 million tons in 1995 to 3.5 million tons in 1999. Further expansion is planned.
- Alumar (Sao Luis)
Alcoa Aluminio (of which Alcoa Inc. owns 59%), manages and owns 35% of the Alumar cost- and production-sharing refining and smelting venture near Sao Luis, in the northeastern state of Maranhao. Other investors in the Alumar venture include Billiton (36%), Alcoa/WMC subsidiary Abalco (19%), and Alcan (10%).
The Alumar refinery's capacity stood a 1.25 million metric tons, most of which was consumed in its smelter. In addition, Alcoa Aluminio operates a 275,000 tpy refinery in Pocos de Caldas, which also supplies the Alumar smelter. (Alcoa 10-K, FY1999)
- Aluvale
In 1999, Hydro of Norway signed a memorandum of understanding to take a 25% interest in Brazilian alumina producer Vale do Rio Doce Aluminio (Aluvale). Aluvale is a subsidiary of Companhia Vale do Rio Doce (CVRD). The deal would guarantee the delivery of 378,000 tons per year of alumina to Hydro. The plant in the state of Para' is slated for an 800,000 metric ton expansion to 2.3 million tons in 2002. (Plunkert, 2000; Stephen Johnston, "Aluminium," Mining Annual Review, March 2000)
Canada
Alcan owns and operates a 1.2 million ton alumina refinery in Jonquiere,
Quebec. It imports bauxite mainly from Brazil and Guinea. Alumina produced in Jonquiere mainly supplies Alcan's several smelters in Quebec. (Alcan 10-K, FY1999)
China
China was the world's third largest producer of alumina in 1999, up from
fifth place in 1995. Production grew by 57 percent, from 2.2 to 3.8 million tons, in five years. Most alumina produced in China is consumed
domestically. (Plunkert, 2000)
Alumina refining is continuing to grow. Pogguo Aluminium Co. is planning to boost capacity at its Guangxi refinery from 350,000 to 950,000 tons per year (tpy). French transnational Pechiney is working with the Guizhou Aluimium Works on an upgrade at a 400,000 tpy refinery that would boost production by 100,000 tpy. The Shandong Aluminum Plant is expanding production at its refinery from 620,000 to 770,000 tpy. (Plunkert, 2000)
Guinea
The Friguia alumina plant has a capacity of about 640,000 tons per year. Friguia is 49% government/51% private joint venture, with Pechiney, Noranda, Alcan, and Hydro as private investors. (Mining Journal, Jan. 2, 1998)
India
Alcan's subsidiary, Indal, owns and operates alumina refineries in Belgaum (Karnataka) and Muri (Bihar) with a combined capacity of 390,000 tons. It is planning to expand capacities at Belgaum to 365,000 tons and at Muri to 101,000 tons. (Alcan 10-K, FY1999; Mining Annual Review March 2000)
State-controlled National Aluminium Company (Nalco) plans to expand its
alumina refining capacity in India to 1.58 million tons. (Mining Annual
Review, March 2000)
Iran
Czech company Technoiomport has developed a mine and 100,000 ton per year alumina refinery around bauxite reserves in Jajarm, northern Iran. The government also wants investment in a proposed two million ton per year alumina refinery on Qeshm Island, which would serve domestic smelters, Alba and other Gulf region producers. ("Iran," Mining Annual Review, June 1992)
Ireland
Alcan owned a 1.4 million ton per year alumina refinery in Aughinish, which it sold to Glencore AG in 1999. (Plunkert, 2000; Alcan 10-K, FY1999)
Jamaica
Alcoa and Alcan drive alumina refining in Jamaica, the world's fourth
largest alumina refiner.
Alcoa and the Jamaican government are 50/50 partners in an alumina refinery in Clarendon Parish. Alcoa manages the 1 million tpy refinery. (Alcoa 10-K, FY1999)
Alcan owns (93% share; government 7%) and operates alumina refineries in
Kirkwine and Ewarton. Alcan's Kirkvine and Ewarton plants had a combined
capacity of 1.175 million tons in 1999. Most of this alumina supplies
Alcan's smelters in Canada and the U.S. (Alcan 10-K, FY1999)
Russia
The three largest alumina refineries in Russia are located in Bogoslovsky (1.05 million tons capacity), in the Ural Mountains (950,000 tons), and Achinsk (900,000).
The Achinsk refinery is in dire straits. In 1999 according to Mining Annual Review (March 2000), "the struggle got physical at financially-troubled Achinsk." In September 1999, workers forced a court-appointed manager to leave. "Police and the governor came but the workers refused to allow them into the plant." (Mining Annual Review, March 2000)
Spain
Alcoa runs a 1.11 million ton refinery in San Ciprian. It planned to boost production there by 220,000 tons per year by March 2001. (Plunkert, 2000; Alcoa 10-K, FY1999)
Suriname
The U.S. State Department calls alumina exports "the backbone of Suriname's economy." Alcoa began producing alumina there in 1941. "The preeminence of bauxite and Alcoa's continued presence in Suriname is a key element in the U.S.-Suriname economic relationship," reads a 1998 State Dept. briefing. (Bureau of Inter-American Affairs, "Background Notes: Suriname," U.S. Department of State, March 1998)
Alcoa and Billiton share operations at the Suralco alumina refinery in
Paranam, on the Atlantic coast. The 1.7 million ton Paranam refinery
processes all of the bauxite mined at the two company's mining operations. Alcoa owns 55% of the Paranam refinery. Billiton owns the other 45%. (Alcoa 10-K, FY1999)
Ukraine
In March 2000, the Ukrainian government privatized 30 percent of Nikolaev, a 1.05 million ton per year alumina refinery, against the wishes of the country's parliament. A company linked to Sibirsky of Russia won the 30% share at auction. (Mining Annual Review, March 2000)
United States
The USA holds more alumina refining capacity than any country outside
Australia. Almost all of the bauxite consumed at these refineries is
imported.
In 1995, the U.S. had an annual alumina refining capacity of 5.6 million
tons. Four Bayer refineries were in operation at the end of the year.
Operational capacity grew to 6.2 million tons in 1998, then fell to 5.1
million tons after Kaiser's Gramercy alumina refinery suffered a
catastrophic explosion in 1999.
At the end of 1999, operational alumina plants in the U.S. included:
Alcoa's 2.3 million ton refinery in Point Comfort, Texas, and 600,000 ton refinery in St. Croix, Virgin Islands; Ormet's 600,000 ton refinery in Burnside, Louisiana; and Reynolds' 1.6 million ton plant in Sherwin, Texas. Smelters in North America consume almost all of these plants' production.
On Dec. 31, 2000, an investment group purchased the Sherwin, Texas,
refinery -- the ninth largest in the world -- from Alcoa/Reynolds. The
group includes Meriwether Capital Corp. and BPU Reynolds. Meriwether's
founder, George O'Neill, is chairman of BPU Reynolds. ("Meriwether Capital,
BPU Reynolds Group Purchases Sherwin Alumina
Refinery From Alcoa," Business Wire, Jan. 3, 2001)
Twenty-three U.S. smelters consumed 7.34 million metric tons of alumina in
1999.
U.S. aluminum producers imported about 3.9 million tons of alumina each
year from 1991 to 1994, mainly from Australia (73%). Jamaica (10%), and
Suriname (6%). Imports remained around 3.9 million tons in 1998 and 1999.
Again, Australia (62%), Suriname (15%), and Jamaica (9%) were the leading
alumina sources. (Plunkert, 2000; "Bauxite and Alumina," U.S. Geological
Survey, Mineral Commodity Summaries, January 1996)
Venezuela
Bauxilum is a subsidiary of Corporación Aluminios de Venezuela S.A..
(CAVSA) that produces bauxite and alumina. In August 2000, Pechiney and
Billiton were the finalists in a $260 million bid to boost production by
15% at Bauxilum. Alusuisse (now part of Alcan) owns a 1% stake in Bauxilum.
("CVG delays decision," VHeadline.com, Aug. 2, 2000)
C. Aluminum
Aluminum smelting technique has not changed much over the past century. The
basic process -- Hall-Heroult electrolysis -- has been around for many
decades. The first step in smelters is the dissolving of alumina in a
molten cryolite bath. Electric current passes through the solution,
separating alumina into aluminum and oxygen.
Four kinds of technology execute this process. Many plants, especially
those in developing countries, employ the Soderberg method of turning
alumina into aluminum. There are two basic types of Soderberg aluminum
reduction technology: horizontal stud (HSS) and vertical stud (VSS). The
other two technological groups are prebaked: centerwork prebaked (CWPB) and
sidework prebaked (SWPB).
CWPB technology is generally cleaner, more efficient, and more automated
than the others. However, as a MIT team noted, "due to the large size of
capital investments required for modernization of smelter technology, all
four technologies are still in use." These scientists estimated global
production in the four technological categories, as follows, in 1995: CWPB:
11.3 million tons/year; VSS: 3.7 million; HSS: 2.0 million; SWPB: 1.9
million. (Harnisch et al)
Of the 67 operational smelters for which the employed technology could be
determined during this study's research, 36 employed the Soderberg
technology, while
29 used the more modern pre-bake method. Of the 36 Soderberg plants, only
five were located outside Latin America, Africa, Eastern Europe and Asia.
Soderberg plants are notorious polluters. They demand more energy and emit more fluorine, carbon dioxide and perfluorocarbons (highly potent
greenhouse
gases) than smelters employing pre-bake technology.
"Cheap power is the key to low-cost smelting," offers the Financial Times.
"So smelters are often built in seemingly odd places, such as Siberia,
Iceland and Dubai, purely because of their access to cheap energy.
Amazingly, it can make economic sense to import bauxite or alumina to
Siberia, smelt it and then export the aluminum again. (From an engineer's
point of view, Zaire offers the world's best site for a new smelter.
Political risk is a different question, of course.)" (Gillian O'Conner,
"Financial Times - 2000 industrial survey: Why the aluminium business works
differently," on FT.com)
In the 1980s, as tariffs lowered in the developing world, aluminum smelting
began to proliferate in Latin America, Asia and the Middle East. "With the
relaxation of tariff barriers, strongly supported by the U.S. Aluminum
Industry, the location of new manufacturing resources will be increasingly
determined by access to new markets and favorable labor and energy costs,
as well as regional tax benefits," read a brief by the Aluminum Association
in March 1996 that predicted increasing investment in Asian aluminum
smelting capacity.
Early in the 1990s, shortly after the breakup of the former Soviet Union
and the 50% decline of its military-industrial economy, Russian aluminum
producers began flooding Western markets with cheap aluminum, and the
resulting global glut, temporarily halted this trend.
"We cannot ignore the fact that, with minimal demand at home, the Soviet
smelters may continue putting substantial amounts of aluminum on the world
market and the rest of the industry will have to adjust to this reality.
Obviously, anyone with a smelter project on the drawing boards will do well
to take a second look and re-think the project," said Bill Bourke,
then-chairman of Reynolds Metals, in 1991. (Financial Times (London), Nov.
22, 1991).
In the mid-1990s, the end of the Western recession, growing demand in
emerging market economies, and the privatization of national-owned aluminum
companies sparked another wave of transnational corporate investment in
developing countries. Global aluminum consumption reached a record 18.9
million metric tons in 1997, a 5.4% increase over 1996 levels (Mining
Journal, June 5, 1998)
After another hiccup -- the Asian economic crisis -- aluminum consumption
is growing steadily again and exceeded 27 million tons in 1999. Consumption
grew by an annual rate of 3% from 1990 to 1998, and 3.9% from 1998 to 1999.
The transportation industry has the heaviest aluminum appetite (6.9 million
tons in 1998), which is growing at a rate over 5 percent per year. (FT.com;
Mining Annual Review, March 2000)
In 2000, the U.S. Geological Survey predicted that "aluminum demand in the
United States and the rest of the world should remain strong with the major
growth area continuing to be the transportation industry, especially the
automotive market." (Plunkert, 2000)
Industry shift As energy and other capital costs rise, old smelters are being shut down . Aluminum smelting is shifting steadily to developing countries in Africa, Latin America, the Middle East, and Asia. In the late 1980s, the industrialized western world became a net importer of aluminum from developing countries. The trend of increasing production concentration in developing countries is "likely to continue well into the (21st) century," predict Harnisch et al. An agreement that commits the industrialized west to greenhouse gas emissions reductions could enhance this dynamic. "At present it is unclear whether the Kyoto Protocol will accelerate or mitigate these global trends.
The outcome greatly depends on whether innovative financing mechanisms can be developed that help to abate greenhouse gas emissions in the (developing) countries, while at the same time preserving the competitiveness of their aluminum industry." (Jochen Harnisch, Ian Sue Wing, Henry Jacoby, Ronald Prins, "Primary aluminium production: climate policy, emissions and costs," paper presented at the Kyoto and Montreal
Protocols' Joint Expert Meeting, Petten, May 1999)
Growth regions
Africa
In 2000, with aid from the International Finance Corp., a consortium led by
Billiton completed construction of a 250,000 ton per year smelter, named
Mozal, in Mozambique. The owners plan to double the plant's capacity in
future years. (See Banks chapter for more details).
In Richards Bay, South Africa, Billiton owns two smelters that produce more
than 3% of the world's aluminum. Billiton newer 466,000 ton Hillside
smelter, and its older Bayside smelter, have a combined capacity of 690,000
tons per year. The two smelters form one of the world's largest smelter
complexes. (Billiton website,
www.billiton.com/newsite/html/investor/aboutus/Hillside&Bayside.htm;
"Industry Overview," www.isa.org.za/industry_overview/sectors/metals.htm)
Elsewhere in Africa, Kaiser controls the 200,000 ton Valco smelter in
Ghana; Pechiney built a 90,000 ton smelter (Alucam) in Cameroon; and
Bechtel has conducted a feasibility study for a new aluminum smelter in
Guinea, with Alusuisse's backing. (Roger Moody, "The Gulliver File - Mines,
people and land: a global battleground," published by Minewatch, 1992;
Kaiser 10-K, FY1999)
Asia
- China
In China, aluminum production grew by 9.7 percent from 1998 to 1999,
reaching a record total of 2.6 million tons. Most Chinese smelters are
small-scale. The largest, Guizhou, produced 227,000 tons in 1999. The other
four largest smelters are Qinghai (205,000 tons in 1999), Baotou (117,000),
Pingguo (110,000), and Qingtonxia (102,000). More than 90 other smelters
produce less than 100,000 tons. (Mining Annual Review, March 2000)
Expansion projects are planned at Baotou (105,000 ton additional capacity
by 2002), Pingguo (200,000 ton possible expansion), Qingtongxia (100,000
ton expansion planned for 2001), and 12 other smelters. (Mining Annual
Review, March 2000)
In Nov. 1999, Alcoa entered into a 30 year agreement to sell at least
400,000 metric tons of alumina to the China State Nonferrous Metals
Industry Administration. (Alcoa 10-K, FY1999)
- India
With abundant bauxite reserves, and cheap energy and labor, aluminum
smelting is on the rise in India.
Aluminum plants in India include the Nalco smelter in Angul, Orissa, a
100,000 ton smelter in Korba owned by Bharat Aluminium, three smelters
owned by Alcan subsidiary Indian Aluminium Company (Indal), and a smelter
owned by Hindalco Industries.
Nalco and Bharat are controlled by the Indian government. Nalco plans to
expand its Angul smelter's capacity from 230,000 to 348,000 tons. The
government has announced that it would sell minority stakes in Nalco and
Balco, but union opposition has stalled the privatization plan.
Indal's 60,000 ton Belgaum smelter has been closed since 1992. The company
closed one potline at its 20,000 ton plant in Alpuram (Kerala). Indal
shifted production to its Hirakud smelter in coal- and bauxite-rich Orissa,
where capacity doubled from 30,000 to 60,000 tons in 1999.
In 2000, Hindalco announced plans to add 100,000 tons of capacity to its
242,000 ton smelter in Renukoot, Uttar Pradesh.
(Stephen Johnston, "Aluminium," Mining Annual Review, March 2000; Business
Today, March 7, 1998; Ashok Sharma, "Nalco production up in April-August,"
Financial Express, Nov. 1, 1999; "Hindalco board okays expansion,"
Financial Express, Jan. 30, 2000; "Production capacities in India," at
www.mitsui.co.jp/alm/statistics/india.html; "Disinvestment Likely To Be Put
On Hold - NALCO May Push Through With Equity Restructuring," Hindu
Business, May 9, 1997)
- Indonesia
A consortium of 12 Japanese companies, backed by $3.1 billion in Japanese
government financial aid, holds a majority stake in the 225,000 ton Inalum
smelter in North Sumatra. (Indonesian Commercial Newsletter, Nov. 25, 1991)
Latin America
- Argentina
Argentine company Aluar boosted its capacity from 176,000 to 260,000 tons
in 1999. Most of this production is shipped to Japan, the U.S., and Europe.
(Reuters, Feb. 3, 2000)
- Brazil
Large smelters in Brazil include Alumar (350,000 tpy capacity), Albras
(340,000), and CBA (225,000).
- Chile
Noranda has proposed building a 440,000 ton aluminum smelter in Chile. This
plan awaits commitments from financial partners and the Chilean government.
(Stephen Johnston, "Aluminum," Mining Annual Review, March 2000)
- Venezuela
Venezuela is seeking investors in its aluminum industry, which is fueled by
vast bauxite reserves and cheap hydroelectric power. (Venezuelan Commercial
Office)
The Venezuelan Corporation of Guayana (CVG) is installing a new 250,000 ton
potline at the Alcasa smelter in Bolivar State, which would more than
double its 210,000 tpy capacity. CVG is trying to attract foreign investors
in the $800 million project. Reynolds (now part of Alcoa) owns a 7.3% stake
in Alcasa. (Venezuelan Commercial Office)
CVG's Venalum subsidiary operates a 430,000 tpy smelter. Six Japanese
partners (Showa Denko, Kobe Steel, Sumitomo Chemical, Mitsubishi Aluminum,
Mitsubishi Metal, and Marubeni Corp.) own a 20% stake in the Venalum
smelter, the ninth largest in the world. (Venezulean Commercial Office)
Middle East
"Cheap fuel, labor, and locational advantage" help the region compete in
the global aluminum market, reported Gulf Business Online in November 2000.
"The aluminium industry in the Arabian Gulf region has never had it so
good."
In the year 2000, the region's two main smelters, Alba of Bahrain and Dubal
of the United Arab Emirates, exceeded one million tons of production
capacity, and accounted for 8% of global production. Alba and Dubal rank
among the five largest smelters in the world.
Planned smelters in Kuwait, Qatar, Abu Dhabi, and Oman might be taken off
the shelf, as European capacity shrinks and global consumption rises.
(Roger Jacobson, "Future looks bright for the GCC aluminium industry," Gulf
Business Online (Dubai), Nov. 9, 2000)
- Bahrain
The Aluminium Bahrain (Alba) smelter is a dominant economic force in this
tiny country of 635,000 people squeezed into land one-fifth the size of
Luxembourg. Oil production is the only industry that is bigger. Dubal is
slated to expand from 496,000 to 750,000 tons per year of capacity.. The
company started producing 120,000 tpy in 1971.(European Institute for
Research on Mediterranean and Euro-Arab Cooperation, October 2000, on
website: http://www.medea.be/en/index023.htm; Middle East Business
Intelligence, Jan. 5, 1996; AFP, Aug 27, 1995; Moneyclips, Nov. 21, 1996)
- Egypt
The Egyptalum 200,000 ton smelter is targeted for an expansion to 300,000
tons per year of capacity.
- Iran
Iran hosts a long-time producer, Iralco (120,000 tons per year), and a new
and troubled plant, Al-Mahdi. Another smelter has been proposed on Qeshm
Island, using discarded technology from a retrofitted plant in Slovakia
(see Banks chapter for more details).
Dubal of the UAE provides technical services to the 200,000 tpy Al-Mahdi
smelter. The government of Iran owns a majority share of Al-Mahdi, with the
rest owned by International Development Corp. of Dubai. International
Development Corp.'s investors included fugitive billionaire Marc Rich (see
Corporations chapter), U.K. construction company George Wimpey, Caradel
Investments, and former UAE ambassador to London, Mahdi Al-Tajir. (Mining
Annual Review, June 1992)
- Oman
Dubal is pondering the construction of a new $2.5 billion, 480,000 ton
smelter in Oman.
(Rasha Owais, "Dubal studies Oman smelter project," Gulf News, April 10,
1999)
- U.A.E.
Dubal Aluminum (Dubal) opened in 1979 and expanded from 375,000 to 536,000
tons of capacity in 1999, making it the third largest smelter in the world.
(Bricad Associates website, http://www.bricad.com/aluminium/dub/index.html;
Dubal website, www.dubal.co.ae)
III. Corporate Control
"Historically, the main agents of the mining developments in the Third
World in general and Africa in particular have been private companies from
the major capitalist countries, even though they were constantly supported
by their respective states. Mineral specialization in the Third World thus
developed within the framework of an international extension of the
oligopolistic structure of the advanced capitalist economies of Western
Europe and North America," observed Samir Amin of The United Nations
University in 1988. (Samir Amin, "Mining in Africa today - Strategies and
prospects," The United Nations University, 1988)
Six companies -- Alcoa, Kaiser, Reynolds of the U.S., Alcan of Canada,
Pechiney of France, and Alusuisse of Switzerland -- long dominated the
aluminum production cycle. These six majors controlled half of the bauxite
mining, two-third of the alumina refining, and seven-tenths of the aluminum
smelting operations of the capitalist world in 1988. (Amin)
Compared to other industries, notes the Financial Times, the aluminum
industry has an "unusual structure, with many of the larger companies
vertically integrated -- operating right through the production chain,
starting with digging up the bauxite and finishihng by producing metal..."
(Gillian O'Connor, "Hyperactivity in a strong market," Financial Times,
2000 on FT.com website)
In the year 2000, merger-mania struck the aluminum corporate sector,
reinvoking historic fears of monopolism.
When aluminum production developed in the late 1800s, two companies --
Alcoa and Pechiney -- dominated the industry. The firms controlled patents
on Bayer technology for alumina refining and Hall-Heroult technology for
aluminum smelting. (Amin) Alcoa also controlled patents on bauxite mining
and hydroelectric technologies (www.endgame.org). "A long period of
technological monopoly enabled these enterprises to acquire hydroelectric
facilities and bauxite deposits while increasing their production scale.
When their monopoly of the technology ended, they found themselves in a
position of economic monopoly, based on increasing returns to scale," wrote
Amin.
Alcoa's monopolistic grip in the U.S. loosened a bit by the second World
War. In 1945, a U.S. appeals court declared the corporation to be a
monopoly, and forced it to spin off its Canadian sister, the Aluminium
Company of Canada (Alcan). The courts also ordered the sale of smelters
that the government built during the war, using Alcoa technology, at a low
price to Reynolds and Kaiser. (www.endgame.org/primer-history.html;
www.clt.astate.edu/crbrown/alcoa.htm; "Alcoa's actions may catch Justice's
eye," Purchasing Online, Oct. 10, 1999)
Now, Reynolds, the third largest producer, has returned to the Alcan fold.
(see below) Also in 2000, the second largest producer -- Alcan -- attempted
to merge with the fifth and 14th largest firms, Pechiney and algroup (a
division of Alusuisse Lonza). Pechiney withdrew from the proposed combine
early in the year. This reduced the conglomeration's rise against the new
Alcoa/Reynolds force.
Alcoa now hold over 4.7 million tons of aluminum production capacity
dwarfing Alcan's 1.9 million. The third largest transnational producer,
Billiton, holds 0.9 million in poroduction capacity. (Financial Times,
"Aluminum/Current Trends," on FT.com)
As in the primary aluminum sector, Alcoa, Alcan, and Billiton dominate the
alumina refining component of the industry. Last year, Billiton gained
Reynolds' majority hold on the massive Worsley refinery in western
Australia. The U.S. Dept. of Justice mandated this sale in the resolution
of its anti-trust complaint against Alcoa and Reynolds' merger.
Revneues are up for the biggest producers. Billiton earned $577 million in
the fiscal year ending June 30, 2000, up 51 percent from the previous year.
(Commerzbank Securities, "Billiton company report," August 30, 2000) In the
first three quarters of 2000, Alcoa's earnings rose 65% from 1999. Income
rose from $853 million to $1.3 billion. (Alcoa 8-Q, FY1999)
The largest companies, reported the Financial Times, benefit from vertical
integration that enhances their ability to stablize prices and dictate
growth. "Although concerted action by the industry is anathema to
competition authorities, particularly in the US, self interest means that
some of the larger companies have been willing to act as 'swing producers':
cutting output when prices are falling, increasing it when they are
rising," the FT reported in 2000. "Some smelters that were mothballed in
the 1990s remain out of action... But the existence of those mothballed
smelters puts an effective cap on prices. Meanwhile, capacity is being
steadily increased, in line with growth expectations." (Gillian O'Connor,
"Hyperactivity in a strong market," Financial Times, 2000 on FT.com
website)
Table. Transnational Giants
Corporate aluminum production in 1999
(metric tons per year)
Company Capacity Primary production
Alcoa/Reynolds 4,256,000 3,800,000
Alcan/Alusuisse 1,372,000 1,744,000
Billiton 886,000 890,000
Pechiney 828,000 827,000
Hydro 745,000 749,000
Comalco 659,000 654,000
Aluminum Bahrain 537,000 515,000
CVG (Venezuela) 520,000 482,000
Kaiser 510,000 413,000
Dubal 424,000 433,000
VAW 421,000 421,000
Ormet 256,000 256,000
Source: CRU International, as reported in "Who's Who: Mergers, takeovers in
high summer," Financial Times at FT.com website.
Some less traditional transnational corporations have assumed significant
roles in the aluminum production cycle:
* Marc Rich, the former U.S. citizen and tax evader pardoned by President
Bill Clinton (known to some as "Aluminium Finger"), has invested in an
Iranian smelter, traded in aluminum exports from Russia, owned alumina
refineries in the Caribbean, and is hoping to benefit from a World
Bank-backed bauxite/alumina complex sale in Guinea.
* xxxxx
#1 Alcoa (including Reynolds)
ALCOA INC.
(a/k/a Aluminum Company of America)
201 Isabella Street
Pittsburgh, PA 15219
1999 revenues: >$16 billion
Chairman, President, and CEO
Alain J. P. Belda
www.alcoa.com
REYNOLDS METALS COMPANY
6601 West Broad Street
P.O. Box 27003
Richmond, VA 23261
1999 revenues: >$4.6 billion
In 1886, an Ohio chemist named Charles Martin Hall discovered the process
of electrolyzing alumina into aluminum, the same year that Paul Heroult
made the same discovery in France. In 1888, Hall, with backing from the
Mellon Bank, helped to found the Pittsburgh Reduction Company and built a
pilot plant and soon launched a global and revolutionary expansion. In
1907, the company name was changed to the Aluminum Company of America.
("Biography, Charles Martin Hall," on Oberlin College Archives website,
www.oberlin.edu/~archive/WWW_files/hall_cm_b.html. Oberlin maintains many
of Hall's records, including extensive filings from lawsuits, from this
early era of the aluminum industry.)
The company maintained a monopolistic position in the industry through
World War II, after which the U.S. government ordered the company to sell
several smelters and sever its ties to Alcan.
In 1943, George Seldes wrote in Facts & Fascism (published by In Fact) that
"By its cartel agreement with I.G. Farben, controlled by Hitler, Alcoa
sabotaged the aluminum program of the U.S. air force. The Truman Committee
[on National Defense, chaired by then-Senator Harry S. Truman in 1942]
heard testimony that Alcoa's representative, A.H. Bunker... prevented work
on our $600,000,000 aluminum expansion program.
"Thurman Arnold, as assistant district attorney of the United States, his
assistant, Norman Littell, and several Congressional investigations, have
produced incontrovertible evidence that some of our biggest monopolies
entered into secret agreements with the Nazi cartels and divided the world
up among them. Most notorious of all was Alcoa, the Mellon-Davis-Duke
monopoly which is largely responsible for the fact America did not have the
aluminum with which to build airplanes before and after Pearl Harbor, while
Germany had an unlimited supply."
"If America loses this war," said Secretary of the Interior Harold Ickes in
1941, "it can thank the Aluminum Corporation of America." (George Seldes,
Facts & Fascism (In Fact, 1943), pp. 68, 140-144.
Alcoa Inc. remains the world's largest producer of alumina and aluminum,
positions that it solidified with the acquisiton of Reynolds Metals in
2000. Reynolds was the third largest aluminum producer in the world, and
the biggest aluminum foil maker. (Reynolds Metals Co., Form 10-K (FY1999),
annual report to Securities and Exchange Commission, March 3, 2000)
More than half of Alcoa's revenues are generated in the United States
($10.4 billion of $16.2 billion in 1999) (Alcoa Inc., Form 10-K (Fiscal
Year 1999) filed with Securities and Exchange Commssion, Feb. 28, 2000)
On August 18, 1999, Alcoa announced plans to acquire Reynolds Metals
Company (Richmond, Va.), in a $5 billion stock purchase. Reynolds was the
second largest aluminum company in the United States, and third largest in
the world. The U.S. Department of Justice forced Alcoa to sell off
Reynold's alumina refinery stakes before allowing the merger to conclude in
May 2000.
The Justice Dept. charged that the merger "threatens substantial and
serious harm to (alumina) consumers." It asserted that it "will
substantially lessen competition in the refining and sale (of alumina)....
substantially increases the likelihood that Alcoa can unilaterally control
prices and also increases the likelihood that the remaining (alumina)
producers will be able to coordinate to raise prices, harming consumers. As
a result of the proposed merger, higher prices are likely for aluminum and
other products containing alumina." (United States of America, Department
of Justice, Antitrust Division v. Alcoa Inc. and Reynolds Metals Company,
complaint, May 3, 2000)
In its May 3, 2000, settlement with the Justice Department, Alcoa agreed to
sell Reynolds' stakes in alumina refineries in Worsley, Australia (56
percent stake); Stade, Germany (50%); and Sherwin, Texas (100%). It also
agreed to sell one-quarter of Reynolds' interest in an aluminum smelter in
Longview, Washington. On Aug. 29, 2000, Billiton plc agreed to purchase
Alcoa/Reynolds' 56% stake in the Worsley alumina refinery for $1.49
billion. (Alcoa, Form 10-Q, submitted to U.S. Securities and Exchange
Commission, Oct. 20, 2000)
Alcoa's latest merger follows its $3.8 billion takeover of Alumax in 1998.
Alumax was a joint venture between Amax, Mitsui and Nippon Steel. During
the Alumax merger, the Justice Dept. forced Alcoa to sell its aluminum cast
plate operations. The two companies, before the merger, controlled 90
percent of the global market for the manufacture and sale of cast plate.
(U.S. Dept. of Justice, "Justice Department clears Alcoa's proposed
acqusition of Alumax after Alcoa agrees to sell its cast plate operations,"
press release, June 15, 1998; Roger Moody, "Gulliver PUK
(Pechiney-Ugine-Kuhlmann) Dossier" in The Gulliver File - Mines, people and
land: a global battleground, Minewatch, 1992.)
In 1999, Alcoa objected to a U.S. Court of Appeals (Eleventh District)
affirmation of a decision that Alumax owed $411 million in taxes, including
interest, from fiscal years 1984-1986. (Alcoa 10-K, FY1999)
Also in 1999, the DOJ forced Alcoa to sell one of two aluminum sheet
manufucturing plants that it obtained in its $41 million takover of Golden
Aluminum Company from ACX Technologies Inc. (Department of Justice,
"Justice Department requires divestiture in Alcoa's Acquisition of Golden
Aluminum Company," press release, Nov. 5, 1999)
With the Alumax merger, Alcoa's U.S. aluminum smelting capacity surged
from a 31 percent national share (1.3 million metric tons) to 46 percent
(1.9 million). The addition of Reynolds' capacity gives Alcoa a 57 percent
share (2.4 million) of U.S. production capacity. Including Reynolds'
Canadian operations, Alcoa now holds more capacity (3.3 million tons) in
North America than exists in Russia. ("Alcoa's actions may catch Justice's
eye," Purchasing Online, Oct. 10, 1999)
- Alcoa and Bush
In late December 2000, President-elect George W. Bush added Alcoa chairman
Paul H. O'Neill to his stable of corporate cabinet members. He nominated
O'Neill to be the new Treasury Secretary. O'Neill, a former International
Paper president, became an Alcoa director in 1986, and chaired the
company's board from 1987 to 2000. (Brian Knowlton, "Alcoa Chief Picked to
Head Treasury," International Herald Tribune, Dec. 21, 2000; Alcoa 10-K,
FY1999)
Alcoa operates a smelter in Rockdale, Texas. It also plans to strip mine
15,000 acres in two Central Texas counties for fueling the Rockdale
smelter. Bush, as governor of Texas, was criticized by environmentalists
and neighbors of Alcoa's central Texas lignite strip mines for not opposing
Alcoa's plans to stripmine their land and ship massive amounts of
underlying groundwater to San Antonio (see Human Rights chapter)
"We hope that Gov. Bush will recognize our struggle against Alcoa is the
perfect opportunity for him to demonstrate his willingness to protect the
rights of Texans against the wrongs of a few rich, corporate giants," said
Travis Brown of Neighbors for Neighbors, a local group of concerned
citizens. (Peggy Fikac, Express-News (Texas), Oct. 19, 1999)
No such luck. Bush punted all responsibility for the decision to the Texas
Railroad Commission.
On the environment, O'Neill has said, "I don't see environmental issues as
a negative for aluminium or Alcoa, they are our friend. As long as
legislatures and governing bodies don't do stupid things, we'll be fine."
(Aluminium Today, 1999. [xxx need citation xxx])
On workers' health in Mexico, he has said "our plants are so clean they can
eat off the floor." The New York Times recently reported on conditions at
Alcoa's factory in Ciudad Acuna, Mexico. The article describes the working
conditions; employees earning $6 a day, being limited to three sheets of
toilet paper per work, and collapsing from gas leaks.In 1993, 179 workers
were hospitalized by a gas leak. Half of the city's 150,000 residents use
backyard latrines. Alcoa opened the auto parts plant in Acuna after the
signing of the North American Free Trade Agreement, sifting production from
San Antonio, Texas. (Sarah Anderson and John Cavanagh, Institute for Policy
Studies (U.S.), Karen Hansen-Kuhn, The Development GAP (U.S.). and Carlos
Heredia and Mary Purcell, Equipo PUEBLO (Mexico), "No Laughter in NAFTA:
Mexico and the United States Two Years After," 1996)
#2 Alcan/algroup
Alcan
1188 Sherbrooke St. West
Montreal, Quebec H3A 3G2, Canada Phone: 514-848-8000
Fax: 514-848-8115
http://www.alcan.com
Alcan Chairman
John R. Evans
Interim President and CEO
Bill Blundell
algroup (former division of Alusuisse Lonza)
Feldeggstrasse 4, Postfach 495
Zurich CH-8034, Switzerland Phone: +41-(0)1-386-22-22
Fax: +41-(0)1-386-25-85
http://www.algroup.ch:
Chairman Martin Ebner
CEO and Managing Director Sergio Marchionne
Alcan/algroup combined 1999 revenues: $12.3 billion
In 1902, Alcan opened as a Montreal, Canada,-based subsidiary of the
Pittsburgh Reduction Company (renamed Alcoa in 1907). It established its
first smelter and hydroelectric power plant in Shawinigan, Quebec. In
1928, Alcan began to splinter from Alcoa. During World War II, Alan opened
numerous new plants in Quebec, and in the 1950s, opened a plant in British,
Columbia. Later, it opened operations outside Canada. (Alcan 10-K, FY1999)
A three-way merger between Alcan, Pechiney, and algroup (the aluminum
divsiion of Alusuisse Lonza) fell apart in early 2000. Facing obstacles
from the European Union and the U.S. DOJ, in April 2000, the "A.P.A."
partners announced that Pechiney would wiithdraw from the three-way merger.
They decided that "divestments which would ultimately be required to meet
the objections of the European Commission would seriously undermine the
strategic viability of the combined company's rolled products business in
Europe." (Alcan-Pechiney-Algroup, "Merger will not proceed," joint press
release, April 13, 2000; also, Plunkert, 2000)
On Oct. 18, 2000, Alcan completed its merger with the Alusuisse Lonza's
algroup division. The algroup shareholders gained a 34 percent share in
Alcan. (Alcan press release, Oct. 18, 2000)
Alcan describes itself as "one of the most international aluminum companies
in the world." (Alcan press release, Aug. 21, 2000) The company's global
operations include:
* Bauxite mining: full or majjority stakes in Jamaican, Australian,
Brazilian, Ghanaian, and Indian mining companies, and minority shares in
Guinean (CBG) and Brazilian (MRN) producers.
* Alumina refineries: full stakes in Brazil (Ouro Preto in Sramenha, Minas
Gerais) and Canada (Vaudreuil in Jonquiere, Quebec); majority stakes in
India (Belguam in Karnataka and Muri in Bihar) and Jamaica (Kirkvine and
Ewarton); and minority stakes in Australia (Gladstone) and Brazil (Alumar).
* Full stakes in seven Canadian smelters with a combined capacity of 1.1
million tons; two small Brazilian smelters, three small U.K. smelters, and
a small U.S. smelter, and majority stakes in two small Indian smelters.
Alcan's share of smelting capacity outside of Canada totals 515,000 tons.
(Alcoa 10-K, FY1999)
Alcan's global operations include the Indian Aluminium Company (Indalco),
Alusuisse has numerous operatrions beyond aluminum production, including
pharmaceutical and cosmetics packaging (through its Wheaton subsidiary) and
food and tobacco packaging (through its Lawson Mardon subsidiary).
#3 - Billiton
Billiton Plc
1-3 Strand
London
WC2N 5HA
United Kingdom
Tel: 44 (0) 20 7747-3800
Fax: 44 (0) 20 7747-3900
Web: www.billiton.com
Revenues in 1999: $4.6 billion
CEO/Chairman: Brian P. Gilberton
In 1860, Billiton adopted articles of association in The Hague. The company
took its name from an island, also spelled Belitung, in the Dutch colony
that became Indonesia. In 1861, the company shipped laborers from China to
the island between Sumatra and Borneo and started digging its first
concession: a tin reserve. Billiton shipped the tin, and lead, to its
smelters in the Netherlands. ("History of Billiton," from www.billiton.com;
"Dutch imperialism, " from www.gimonca.com/sejarah/sejarah05.html)
The Royal Dutch/Shell Group bought Billiton in 1970. In 1994, Gencor of
South Africa bought a majority stake in the company from Royal Dutch/Shell.
In 1997, the non-precious metals assets of Gencor and the minerals
businesses of Royal/Dutch Shell spun off into an independent Billiton that
is now based in London. ("Billiton Plc, Hoover's Company Profile Database -
World Companies 2000; "History of Billiton")
The company moved into the bauxite mining business in the 1940s, when it
began mining bauxite in Indonesia and Surinam. It no longer mines bauxite
in Indonesia, but continues to do so in Surinam, where it runs a bauxite
mine and holds a 45% interest in an alumina refinery.
The company's aluminum interest span the globe. In October 2000, Billiton
took control of Reynolds alumina refinery in Worsely, Australia, which the
U.S. Dept. of Justice ordered sold in the Alcoa/Reynolds merger. Billiton
now owns an 86% stake in the reinery and nearby bauxite mine in Western
Australia. It also controls the Gove bauxite mine in the Northwest
Territories. (Commerzbank Securities, "Billiton company report," August 30,
2000)
Billiton also owns interests in mines, refineries and smelters in Brazil,
South Africa, Mozambique, and Australia. It holds a 15% interest in a
Brazilian company, Mineracao Rio do Norte S.A., which runs one of the
world's largest bauxite mines. It also is a part-owner of the Alumar
alumina refining and aluminum smelting complex in Brazil, and another
Brazilian smelter, Valesul. It owns two aluminum smelters in Richards Bay,
South Africa. Billiton owns 47% of a new smelter that opened in Mozambique
in 2000. Also in 2000, Billiton acquired Reynolds' share of the massive
Gladstone bauxite mine/alumina refinery complex. The company is bidding to
take-over the state-run Venezuelan aluming company, CVG, for $3 billion.
("Billiton background" at www.mbendi.co.za/orgs/cegi.htm; "History of
Billiton"; "Billiton scoops giant Australian alumina miner," Financial
Post, Aug. 30, 2000)
Billiton digs many other minerals. It mines copper and zinc in northern
Quebec, Canada. It operates open pit and underground coal mines in South
Africa through its Ingwe subsidiary. The company mines coal in Australia
and Colombia, and ranks as the world's leading exporter of thermal coal.
Also in South Africa, the company mines zinc from an open pit, and heavy
mineral sands from the coastline. Billiton subsidiary QNI is one of the
world's top five nickel and cobalt producers. Its operations in Colombia
and Australia produce 6% of the world's nickel and 7% of the world's
cobalt. Its chrome mining operations in South Africa and manganese mining
pits in Australia and South Africa rank as the world's largest. ("Billiton
background" at www.mbendi.co.za/orgs/cegi.htm; "History of Billiton";
Hoover's)
Through the $1.2 billion Rio Algom purchase, Billiton also acquired copper
mining companies in Chile (100% of Cerro Colorado), Argentina (25% of
Alumbrera), and Canada (33.6% of Highland Valley). Rio Algom also holds
development rights to a copper and zinc mining project in Peru and a copper
mining project in Chile. In addition to copper and zinc, Rio Algom
distributes uranium and coking coal. (Commerzbank Securities)
For the past 25 years, residents of the Mole Lake/Crandon region have
fought plans to develop a zinc-copper sulfide mine, citing potential toxic
discharges and groundwater depletion. Ojibwe people from the Mole Lake
Reservation farm nearby rice beds. Billiton acquired this proposed mining
site when it bought Rio Algom in October 2000. ("Nader calls on South
African company Billiton to drop Crandon mine plans in Wisconsin," press
release, October 30, 2000)
Billiton is exploring the possiblity of mining lead and zinc in LanPing,
China. This mine would be located near a new massive 958 foot-high dam on
the Mekong River. (www.prop1.org/nucnews/2000nn/0008nn/000804nn.htm)
"Billiton is ambitious," reported Financial Times in 2000. "It has been
keeping a close eye on both Venezuelan privatization prospects and possible
disposals by Brazil's CVRD." ("Who's Who: Mergers, takeovers in high
summer," Financial Times at FT.com website.)
#4 - Pechiney (France)
Pechiney
Headquarters:
7 Pl. du Chancelier Adenauer
Paris, 75116
Telephone: 33-1-5628-2000
Website: www.pechiney.com
CEO: Jean-Pierre Rodier
1999 revenues: $10.1 billion
Pechiney began producing aluminum in 1860. Its operations now span the
globe.
Aluminum accounted for 31.6% of Pechiney's net sales in 1999. It produces
bauxite, alumina, primary aluminum, and secondary aluminum in Australia,
Cameroon, Canada, France, Greece, Guinea, and the Netherlands. Relevant
subsidiaries and affiliates include Aluminium Pechiney, Affimet, Alucam,
Aluminerie de Bécancour, Aluminium Dunkerque, Aluminium de Grèce, ECL,
Friguia, Pechiney Nederland, QAL, and Tomago Aluminium. (Pechiney 1999
Annual Report on www.pechiney.com)
Pechiney's technology, which Heroult pioneed in the 1880s, is used in other
smelters around the world. Nalco in Orissa, India (the largest aluminum
smelter in southern Asia) utilizes Pechiney technology and engineering
servies for its bauxite mining, alumina refining and smelter operations.
(Department of Mines, Government of India, "Mining and Processing: Natioanl
Aluminium Company Ltd.," chapter in Annual Report 1999-2000; see:
www.nic.in/mines; Rajaram Satapathy, "NALCO expansion plan gets off the
ground," Times of India, July 3, 2000)
Other major Pechiney product lines include aluminum and steel beverage cans
(it is the world's largest producer), plastic packaging, and ferroalloys.
Pechiney also invests heavily in uranium mining; for example, in Niger, it
is in a joint venture to mine uranium from the Arlit mine. Arlit hold
estimated reserves of 34,500 tons. The French government, the mine's
primary customer, subsidizes the mining operation. ("Niger - Mining:
Uranium Mining," at www.mbendi.co.za/indy/ming/urnm/af/ni/p0005.htm)
Exerpts from...
Roger Moody's "Gulliver PUK (Pechiney-Ugine-Kuhlmann) Dossier" (published
in 1992)
(Courtesy of The Sustainable Energy and Anti-Uranium Service Inc. Visit
http://www.sea-us.org.au)
"It is hardly surprising that, worldwide, Pechiney (formerly
Pechiney-Ugine-Kuhlmann or PUK) has run into more opposition for its
aluminium operations than its nuclear interests. It is the fourth largest
aluminium producer in the world. It is also France's only aluminium
producer (2), and the largest in Europe.
"Moreover, when it acquired American National Can for US$1bn in 1988, it
became the world's largest producer of metal drinks cans.
"Pechiney is owned 75% by French state interests (10% of which is in the
hands of Assurances Generales de France, acquired in 1990. Although plans
to privatise Pechiney were high on the agenda (after the group finished
restructuring in 1986, the French socialist government has so far applied a
brake to both privatisation and nationalisation.
"By 1988, the company saw an upturn in its fortunes, with the saving of two
domestic smelters planned for closure earlier in the decade and
construction of another in Normandy; its nuclear fuels activities proving
"highly profitable"; a JV under discussion with the USSR which would be the
first of its kind; and highly successful returns from its ventures in the
USA, especially Howmet Turbine.
"Pechiney was set up in 1855, began producing aluminium five years later,
and - with a spectacular rise in output prior to WW2 - took over several
companies on the way. In 1971 it merged with Ugine-Kuhlmann.
"Spurred by major losses in its aluminium sector and a downturn in
production of 6% in 1983, Pechiney expanded its two French smelters, but
was squeezing the rest. The same year, it acquired a stake in a
"hypothetical" French nuclear power station in return for cheap power to
run its remaining smelting capacity, drawn from any stations run by
Electricite de France. Under the chairmanship of Georges ("I hate to lose
money") Besse, the new, beaming, loud-talking, joke-cracking President
Directeur General of the company, Pechiney's fortunes were beginning to
turn by mid-1984.
"Pechiney's chemical assets were sold to Elf-Aquitaine, Rhone-Poulenc and
CdF Chemie after Giscard d'Estaing and Mitterand both blocked a potentially
lucrative sale to Occidental Petroleum. The loss-making steel interests
have also been hived off. Cash to finance the huge FFr 3,000,000,000
investment programme was to be found in an agreed sale of the Howmet
Aluminium Corp to Alumax (a JV between Amax, Mitsui and Nippon Steel). In
the event, Howmet remained under Pechiney's control, with Alumax gaining a
half interest each in Howmet's Maryland and Washington smelters.
"This half-sale of Howmet's smelter interests was part of a redeployment of
Pechiney's North American aluminium operations from the USA to Quebec.
"Environmentalists in New Zealand also fought hard against the siting of a
smelter in the beautiful valley of Aramoana, where Pechiney replaced
Alusuisse as the chief foreign partner in a consortium headed by Fletcher
Challenge and CRA in 1982 (14). But talks over the siting of a power plant
for cheap power broke down (15) and the project was shelved (2).
"Meanwhile the Spanish government was tussling with Pechiney over who would
pick up the bill for losses on the 67%-owned Alugasa aluminium subsidiary
(16), and it finally kicked Pechiney out in 1982 (2).
"Pechiney has a 35% interest (along with Gove Aluminium, 59% controlled by
CSR) in the Tomago smelter in New South Wales which came on stream in late
1983, exporting aluminium to Japan: plans to expand the smelter by 50% were
underway in 1990.
"The construction of the smelter was energetically opposed by local farmers
and environmentalists. The smelter is set in the wine-growing region of
Hunter Valley. A large plant producing 230,000 tonnes of aluminium a year
at about $1000/tonne - its ultimate capacity is more than 700,000 tonnes.
Pechiney is employing a new, secret smelting process, purportedly replete
with environmental controls to remove fluoride, and a new form of waste
containment using "excavated cells" covered in two metres of clay.
"In the Netherlands, Pechiney Nederland opened up a controversial smelter
in Vlissingen. (Passengers escaping from Olau ferries after collisions with
Comurhex nuclear cargoes in the Channel can catch a glimpse of it as they
rush to bright lights of Amsterdam). The smelter was the subject of intense
public debate, and opposition from environmental groups on health and
economic grounds
"Pechiney participates in Friguia, a holding company which has a 51 %
interest in alumina production in Guinea. The Frialco consortium is owned
30% by Pechiney, 30% by Noranda, with Alcan and Hydro Aluminium holding 20%
each. Pechiney also mines bauxite and produces alumina and aluminium in
Greece.
"India got Pechiney's technical advice in 1980 when it drew up plans for a
bauxite treatment and aluminium complex in Orissa.
"Soon after Bernard Pache took over the helm at Pechiney in 1985 from
Georges Besse (who had graduated into the company from Cogema), he began
soliciting atomic and other business in Japan, hoping to sell the whole
range of Pechiney's nuclear fuel facilities; fuel for light water reactors,
fabrication of zirconium products (through its Cezus subsidiary), the
production of uranium hexafluoride, and fabrication of fuel elements
themselves.
"Three years later, Uranium Pechiney, together with Cogema and Framatome,
took a 49% share in the US fuel supplier Babcock & Wilcox (B&W Fuel
Company). In 1991, Framatome was negotiating to take control over B&W
Fuel, as well as B&W Nuclear Service Company.
"But its most important nuclear role has probably been as the 50% holder of
Minatome, which - under the 1982 reorganisation - was bought out by
CFP/Total and merged with Total's subsidiary Total Compagnie Miniere.
"Until 1982, Minatome mined uranium inside France, notably at St
Pierre-de-Cantal, using its 94%-owned subsidiary Scumra and producing
100t/year U3O8. Outside of France, Minatome had shares in uranium mines in
Namibia (10% of Rossing), Niger (6.7% of the Somair consortium at Arlit),
and has been exploring for the deadly metal in the USA, Australia (at Ben
Lomond), Colombia, Brazil, Ireland, Britain and Mauritania, not to mention
Namibia.
"Uranium mining activities undertaken by Pechiney in its own name include
grabbing a share in the lucrative Cluff Lake project, managed by Amok as
the controlling partner in Cluff Mining Ltd; Amok itself is owned as to 25%
by Pechiney. Lower down the line, the wholly-owned subsidiary Uranium
Pechiney took a share in a uranium-from-phosphoric acid recovery plant
operated by Gardinier, planned for the early 1980s but which appears to
have closed by 1982. In Algeria the company was studying uranium reserves
in 1977; a contract that year for a feasibility study was awarded to
Pechiney and Minatome, Sogerem (a Pechiney subsidiary), and Stec.
"Five years later, Uranium Pechiney won a US$32M contract to provide
processing technology, engineering and equipment for
uranium-from-phosphates extraction in Tunisia, after Gardinier and PUK
conducted a feasibility study on the project. The unit was to be built at
Gabes on the Mediterranean coast, but plans for extraction had not
materialised by 1984.
"The company's most controversial deals have been with South Africa and in
South America. In the late '70s the French nuclear industry won a large
part of the apartheid republic's burgeoning nuclear power/weapons
programme. The contract for the first South African nuclear power station
(Koeberg 1) went to a consortium headed by Framatome (controlled by
Creusot-Loire which is itself part of the huge Empain-Schneider group that
controlled Pechiney). At roughly the same time, the South African
government announced an agreement with a consortium headed by PUK,
including Creusot-Loire and Westinghouse, to provide uranium enrichment and
fuel fabrication facilities. This arrangement was superseded with the
development of Nufcor's own Pelindaba enrichment plant.
"The Argentinian military dictatorship did, however, in the early '80s
select a consortium headed by PUK to cooperate with the Argentinian CNEA in
opening up the Sierra Pintada uranium deposits. The following year the USA
stopped its own shipments of uranium to Argentina because the military
state refused to sign the Nuclear Non-Proliferation Treaty and, within
another year, the Soviet Union was sending the country 20% enriched
supplies of U-235 in exchange for grain.
"Also, at the beginning of 1981, Pechiney announced it had won a contract
to build Brazil's first uranium hexafluoride plant for Nuclebras. The
plant, to be constructed at Resende near Rio de Janeiro, would employ
Pechiney's own technology and start up in 1985, with an initial production
of 450 or 500 tonnes. The deal completed Brazil's attempts for a decade (in
fact since the West German-Brazilian nuclear pact) to complete the nuclear
fuel chain on its own territory.
"At the same time PUK was assisting Nuclebras to construct the Pocos de
Caldas uranium mining complex, specifically the Otsamu Utsumi mine in Minas
Gerais which officially opened in May 1982, although production started in
December 1981. PUK participated in the actual construction of the mine and
provided technical expertise.
"Although the West German government built Brazil's uranium enrichment
plant in late 1983, the Brazilian regime asked Alsthom-Atlantique, another
French-state-controlled engineering company, to supply vital compressors
for the plant. The Brazilian Minister of Mines and Energy, Cesar Gais, also
visited France to discuss with Pechiney the possibility of using a new
uranium mining procedure developed by Pechiney.
"Uranium Pechiney developed this process to treat high clay ores and
dispersed clays containing uranium, gold and other materials not previously
economically recoverable. This 'physico-chemical' process purportedly
transforms clay into porous granular material ready for solid-liquid
separation.
"It was later reported that both Pechiney and Cogema were trying to
implement a plan to extract uranium and phosphoric acid from openpit ore at
Itataia in Brazil - an "innovative" development since the two are not
chemically bound together. The US$300M project was agreed in April 1984 and
was intended to process up to 20,000 tonnes a day of ore, producing some
2600 tonnes a year uranium, thus making it one of the more important new
uranium ventures.
"The deposit, 200km south-west of Fortelaza in Ceara state, has an
estimated 80,000 tonnes of contained uranium. Pechiney would be responsible
for the project engineering and Cogema for the purchase of any of the
Itataia uranium (46).
"An irony, not lost on anti-nuclear groups concerned with weapons
proliferation, is that both the West German and French governments have
enormously assisted Argentina and Brazil to acquire nuclear weapons
although (one might say because) the two countries, despite a recent
nuclear pact, have long considered the other capable of launching an atomic
attack on "their" soil.
"By the turn of the eighties, Pechiney had established itself as one of the
world's most important aluminium producers, its most significant
manufacturer of metal cans, and one of the few diversified conglomerates
not to have reduced its commitment to nuclear fuel production and
processing.
"In 1991, it saw its plans to start up a smelter at Nasiriva, in Iraq,
dashed by the horrendous conflict between the Saddam Hussein regime and the
Bush administration for control of Kuwait, and had to shelve plans (formed
with Austria Metall, Alumined Beheer and RTZ) to build the Atlantal smelter
in Iceland.
"In Venezuela, an agreement with Aluminium del Caroni SA, the state-owned
company, to construct a smelter on the Orinoco river, was shelved for
financial reasons. But, in 1990, Pechiney agreed to a new project with
Alisa (Aleaciones Ligeras SA) to operate a Venezuelan smelter, to be
constructed by Davy McKee.
(Above from Roger Moody, "Gulliver PUK (Pechiney-Ugine-Kuhlmann) Dossier"
in The Gulliver File - Mines, people and land: a global battleground,
Minewatch, 1992. Courtesy of The Sustainable Energy and Anti-Uranium
Service Inc. Visit http://www.sea-us.org.au)
#5 - Norsk Hydro (Norway)
Norsk Hydro
Hydro Aluminium Metal Products
Bygd¿y Allé 2
Oslo, 0240
Telephone: 47-22-43-21-00
Fax: +47 22 73 79 30
Website: www.hydro.com
1999 revenues: $13.1 billion
CEO: Egil Myklebust
In 1905, Norsk Hydro ASA opened shop, harnessing hydro-electric power in
Norway for the first industrial-scale nitrogen fertilizer plant in the
world. While Norsk Hydro is still in the "plant nutrition" (ammonia, urea,
and other fertilizers) business, it is now a diversified and global
company, the largest publicly-owned firm in Norway.
The aluminum sector, which it entered in 1967, is a major piece of Norsk
Hydro's operations. In 1998, Hydro produced 747,000 tons of primary
aluminum, mostly at its four smelters in Norway (Karmøy, Høyanger, Sunndal
and Årdal). Hydro generates its own hydroelectric power for these smelters.
"Energy, in the form of hydroelectric power, natural gas and petroleum, has
been the basis for Hydro's growth and is the common link among its core
business activities," reads the company's 1999 annual report. (Norsk Hydro
ASA, Form 20-F (FY-1999), filed with the United States Securities and
Exchange Commission).
he company also owns a 49.9 percent stake in Sør-Norge Aluminium A/S
(Søral), which operates another smelter in Norway. Hydro is in a
partnership with Goldendale Aluminum in the United States in the production
of 159,000 tons of aluminum per year. It also an collaboration with Talum,
a small Slovenian smelter, and is a 10% investor in Slovalco, a smelter in
Slovakia heavily backed by the European Bank for Reconstruction and
Development (see Banks chapter).
In 2000, Hydro started a 10-year agreement to purchase a total of one
million tons of aluminum from Companhia Vale do Rio Doce's Albras smelter
in Brazil. The company is studying a possible new 474,000 ton per year
smelter in Trinidad and Tobago. (www.hydro.com)
Hydro's aluminum business is growing, geographically and fiscally. Hydro
realized 50 percent growth in its light metals sector operating income from
1999 to 2000. ("Preliminary results 2000: Strong growth and record
results," Norsk Hydro press release, Feb. 12, 2001)
Hydro supplied only 60 percent of its alumina requirements internally, low
compared to giants like Alcoa. It holds a 35 percent interest in the
Alpart, Jamaica, alumina refinery controlled by Kaiser, and a 25 percent
share in the Alunorte refinery consortium in Brazil. These supply a
combined 905,000 tons of alumina to Hydro's smelters. (Norsk Hydro, Form
20-F)
In a high stakes quest for a captive supply of alumina, Hydro is engaged in
a tense battle with indigenous peoples over its planned joint venture (with
Alcan) to mine and refine bauxite in Orissa, India (see Human Rights
chapter).
Norsk Hydro's other major corporate segments include oil and gas
exploration and development (mainly on the Norweagian continental shelf,
Canada, Libya, Angola, Russia and soon, Iran), industrial insurance,
pharmaceuticals, and petrochemicals such as polyvinyl chloride. Hydro spun
off its agricultural operations, including the world's largest fish farming
company, in 2000. (www.hydro.com)
#6 - Rio Tinto / Comalco
Rio Tinto
6 St. James's Square
London SW1Y 4LD
United Kingdom
Phone: 44 (0) 20 7930 2399
Fax: 44 (0) 20 7930 3249
2000 revenues: $10.0 billion
Website: www.riotinto.com
Chairman: Sir Robert Wilson
Comalco Limited
ACN 004 502 694
Level 25, 12 Creek Street
Brisbane, Queensland 4000
Australia
Telephone: +61 7 3867 1711
Facsimile: +61 7 3867 1775
1999 revenues: A$2.3 billion (Comalco only)
Website: www.comalco.com.au
The sole business of Comalco, a wholly-owned subsidiary of Rio Tinto, is
bauxite mining, alumina refining, and aluminum smelting. The Weipa bauxite
mine in Queensland, Australia, is Comalco's cash cow. In 1957, Commonwealth
Aluminium Corporation and British Aluminium Company formed a partnership
named Comalco, which signed an 84 year lease with the Queensland Government
to mine the Weipa bauxite. (www.comalco.com.au) Comalco owns 100% of the
massive Weipa pit, which produced over 11 million tons of bauxite in 2000.
The Weipa bauxite is processed two refineries. Comalco owns a majority
stake (56% stake) in the Sardinia, Italy, alumina refinery Eurallumina,
which produced 575,000 tons of alumina from Weipa bauxite for Comalco in
2000. It owns a 30% stake in Queensland Alumina Ltd. (Australia), which
refines almost one million tons of Weipa bauxite for Comalco annually. Last
year, the company decided to add site a new 1 million ton per year alumina
refinery in Queensland, ruling out a possible location in Sarawak,
Malaysia. (see Human Rights chapter)
Comalco also owns a 4% production share of the Boké, Guinea, bauxite mining
operation.
In 2000, it produced 701,000 tons of primary aluminum from three smelters
its 100%-owned smelter in Bell Bay, Tasmania, its 54%-owned smelter on
Boyne Island, Queensland, and its 79%-owned smelter on Tiwai Point, New
Zealand.
In 1999, Rio Tinto increased its interest in Comalco to 72%. Rio Tinto
continued to increase its majority stake in Comalco through 1999 and in
February 2000 made an offer for all the outstanding shares.(Stephen
Johnston, "Aluminium," Mining Annual Review, March 2000)
The company is now a wholly-owned subsidiary of Rio Tinto, an infamous
global metals producer. Aluminum accounted for 16 percent of Rio Tinto's
turnover in 2000. Its other mining operations, which span the globe,
include industrial minerals (590,000 tons of borate, 1.4 million tons of
titanium dioxide, 21% of turnover), iron ore (64 million tons, 11% of Rio
Tinto turnover), copper (865,000 tons mined, 15% of turnover), gold (2.7
million ounces mined, 15% of turnover), coal and uranium oxide (combined
17% of turnover, 132 million tons of coal, 2,195 tons of uranium oxide).
("Rio Tinto Earnings Grow 18 per cent to US$1,507 million," Rio Tinto press
release, Feb. 5, 2001)
Since the start of 2000, in addition to the Comalco sublimination, Rio
Tinto took control of an iron ore, copper, and uranium oxide producer named
North for $2 billion, diamond and gold producer Ashton for $400 million,
the Lemington coal mine for $134 million, and the Australian coal assets of
Peabody for over $500 million. (ibid)
#7 - Aluminium Bahrain (Alba)
Aluminium Bahrain
P.O. Box 570
Bahrain
Tel. 973 833448
Fax 973 833833
Website: www.aluminiumbahrain.com
Chief Executive: Karim Salimi
Revenues: not available
The government-controlled Aluminium Bahrain (Alba) smelter is a dominant
economic force in the Persian Gulf emirate .Oil production is the only
industry that is bigger in Bahrain. The company started producing 120,000
ton of aluminum per year in 1971.
The smelter started as a joint venture between the Bahrainian government
(18%), General Cable (17%), British Metal (17%), Kaiser (17%),
Electrokopper (17%), Breton Investments (9.5%), and Western Metals (8.5%).
The government of Bahrain now owns 77% of Alba's shares. The balance is
held by the Saudi Public Investment Fund (20%) and Breton Investments (3%).
(www.aluminiumbahrain.com/intro/share.htm)
Alba is slated to expand from 496,000 to 750,000 tons per year of capacity.
Five engineering companies (SNC Lavalin of Canada, Sofresid of France, and
U.S. firms ICF Kaiser, Bechtel, and Fluor Daniel) are bidding to draw up a
feasibility study and master plan for the $1 billion expansion project.
(European Institute for Research on Mediterranean and Euro-Arab
Cooperation, October 2000, on website: http://www.medea.be/en/index023.htm;
Middle East Business Intelligence, Jan. 5, 1996; AFP, Aug 27, 1995;
Moneyclips, Nov. 21, 1996; "Bahrain Country Profile" at
worldinformation.com)
#8 - CVG
Corporación Venezolana de Guayana
Avenida Guayana con Carrera Cuchivero
Edificio Sede CVG
Altavista, Puerto Ordaz,
Estado Bolívar, Venezuela.
Phone: 58 (86) 661735
Fax:: 58 (86) 614161
Website: www.cvg.com
The governement launched the Venezuelan Corporation of Guayana (CVG) in
1960 to promote industrial development in the Guayana region. Its Bauxilum
subsidiary mines over 4 million tons of bauxite a year.
It is installing a new 250,000 ton potline at the Alcasa smelter in Bolivar
State, which would more than double its 210,000 tpy capacity. CVG is trying
to attract foreign investors in the $800 million project. Reynolds (now
part of Alcoa) owns a 7.3% stake in Alcasa. (Venezuelan Commercial Office)
CVG's Venalum subsidiary operates a 430,000 tpy smelter. Six Japanese
partners (Showa Denko, Kobe Steel, Sumitomo Chemical, Mitsubishi Aluminum,
Mitsubishi Metal, and Marubeni Corp.) own a 20% stake in the Venalum
smelter, the ninth largest in the world. (Venezulean Commercial Office)
The state corporation also produces steel, hydroelectric power, and power,
engages in industrial agriculture and forestry, and promotes tourism.
(www.cvg.com)
#9 - Kaiser / Maxxam
Kaiser Aluminum
Maxxam Group Holdings
5847 San Felipe, Suite 2600
Houston, Texas 77057
Phone: 1-713-975-7600
Kasier president: Ray Milchovich
Maxxam CEO: Charles Hurwitz
2000 Kaiser revenues: $2 billion
Website: none
Kaiser is a subsidiary of Maxxam Inc., which owns 63% of Kaiser's common
stock. The balance of Kaiser's stock is publicly held. (Maxxam Group
Holdings Inc., Form 10-K (Annual Report, FY1999), filed with Securities and
Exchange Commission, March 13, 2000)
While giants like Alcoa, Alcan, and Billiton thrive through mergers,
expansion, and acquisitions, Kaiser has struggled. It lost $39 million in
the third quarter of 1999, and $17 million in the third quarter of 2000.
(ibid)
In the midst of the Alcoa and Alcan mergers, Kaiser president Ray
Milchovich said it was like "dancing with elephants" 10 times your own
size. Financial Times reported that "he added - admittedly in the context
of the company's protracted steelworkers' lockout - that Kaiser needed to
display agility, flexibility, and behavior appropriate to its size and
complexion.... Kaiser, which has suffered an explosion at its Gramercy
refinery, on top of its labor dispute, is respected for its tough
management style and its ability to keep ancient plants running. Its
alumina operations are low cost and it is also one of the five companies
that have signed an exclusive 10-year supply deal with Boeing." Boeing's
other corporate suppliers are Alcoa, Kaiser, Hoogovens and Pechiney.
(Gillian O'Connor, "Hyperactivity in a strong market," Financial Times,
2000, and "Who's Who: Mergers, takeovers in high summer," Financial Times
at FT.com website)
Beginning in January 1999, Kaiser locked out United Steelworkers union
members from working at its U.S. operations, including two aluminum
smelters (the 200,000 ton per year Mead and 73,000 ton per year Tacoma,
Wash. plants) and the Gramercy, La., alumina refinery. In April 2000, the
National Labor Relations Board's general council said the federal
government would charge Kaiser violated labor laws by initiating the
lockout.
(Institutional Shareholder Services, "ISS supports dissident director
nominees at Maxxam," filed by the Committtee of Concerned Maxxam
Shareholders with the SEC, May 22, 2000)
A July 5, 1999, explosion at its alumina refinery in Gramercy also
contributed to the drop in revenues. Replacement workers were injured in
the explosion in the digester area of Kaiser's 1.075 million ton alumina
refinery in Gramercy, Louisiana. Twenty workers were injured, and three
sustained severe disabling injuries. The explosion closed the plant,
sprayed bauxite up to two kilometers away, and severely curtailed bauxite
production in Jamaica. (Stephen Johnston, "Aluminium," Mining Annual
Review, March 2000)
According to the Mine Safety and Health Administration of the U.S. Labor
Departmetn, "the immediate cause of the explosion was an excessive pressure
build up in pressure vessels in the digestion process area of the facility,
following an electrical fault causing a power distribution failure... MSHA
found deficiciencies in the pressure relief safety systems, which MSHA
concluded were violations of the regulations." Kaiser agreed to pay
$513,000 in penalties to resolve the agency's complaint. (Secretary of
Labor, "Secretary's revised motion to approve settlement and motion to
dismiss," Kaiser Aluminum & Chemical Corp. v. Secreatary of Labor et al,
penalty proceedings, Office of Administrative Law Judges, Federal Mine
Safety and Health Review Commission, 2000; "Alcoa, Alcan increase earnings
in third quarter," New Steel, Dec. 1999)
While Kaiser's U.S. operations remain in turmoil, it is expanding its
aluminum operations overseas. International operations include a 90 percent
stake in the 200,000 tpy Valco smelter in Ghana; a 49% stake in the 135,000
ton per year Anglesey smelter in Wales, U.K., a 65% stake in the Alpart
baxuite mining/alumina refining venture in Jamaica, a 49% stake in the KJBC
bauxite mining venture in Jamaica, and a 28% stake in the Queensland
Alumina refining company in Australia. (Maxxam 10-K) In 1996,
Kaiser/Maxxam reported that it had a pending collaboration with the huge,
749,000 ton, Krasnoyarsk smelter in Russa and a pending project, named
Kyril, to collaborate with smelter developments in Lanhzou and Lianhai,
China. (Maxxam Inc., Amendment No. 2 to Form S-3 filed with SEC on April
12, 1996)
After 718 days, Kaiser and the Steelworkers reached a settlement in Sept.
2000, and the lockout finally ended. (Karen Dorn Steele, "Analysts call
aluminium company's settlement a win for solidarity," Spokesman-Review,
Sept. 24, 2000)
Then, Kaiser used a novel approach to turn a profit in the fourth quarter
of 2000. Instead of reopening its Washington state smelters, the company
decided to sell its allotment of federally-produced power on the open
market, thereby benefitting from the growing energy crisis in the western
USA (see Energy chapter). It reported net income of $10.9 million in the
fourth quarter of 2000. "In the fourth quarter, the company sold power
provided by its existing contract with the Bonneville Power Administration
amounting to approximately $135 million," a Kaiser press release reported.
(Kaiser Aluminum Corp., "Kaiser Aluminum Reports Results for Fourth
Quarter, Full Year of 2000," press release, Feb. 7, 2001)
Kaiser's corporate parent, Maxxam, is run by chairman/CEO/president Charles
Hurwitz, who is the target of many union and environmental activists. (See,
for example, www.jailhurwitz.com and www.uswa329.org) Fortune Magazine
recently ranked Maxxam's board as one of the 10 worst in the United States,
citing Hurwitz' dominance. (Spoekesman-Review, Sept. 24, 2000)
Maxxam and Hurwitz took control of Kaiser in 1988, allegedly with the
backing of Marc "Aluminum Finger" Rich (see below). The corporate parent's
main business is logging, particularly cutting down redwoods and Douglas
Firs in California, through its Pacific Lumber subsidiary. Maxxam also
develops real estate in Puerto Rico, Arizona, and California, owns a horse
racing park in Houston, and a greyhound racing track in Harlingen, Texas.
"Hurwitz started out a crook and he hasn't stopped since," wrote Darryl
Cherney, a California redwoods activist. In the early 1980s, Hurwitz was
found guilty of illegal stock market
dealings.(www.jailhurwitz.com/sevensins.html)
In 1995, the U.S. Treasury Department's Office of Thrift Supervision (OTS)
initiated an action that alleges midsconduct by Hurwitz and Maxxam in the
failure of United Savings Association of Texas, a savings and loan company.
This failure forced a federal bailout totalling $1.6 billion. The OTS is
seeking either $821 million in resititution, or reimbursement of $362
million for "unjust enrichment." (ibid; Maxxam 10-K, FY1999)
#10 - VAW (Germany)
VAW aluminium AG (Vereinigte Aluminium Werk)
Georg-von-Boeselager-Str. 25
53117 Bonn / Germany
Tel: + 49 / 228 - 552 2312
Fax: + 49 / 228 - 552 213
Website: www.vaw.com
Annual revenues: DM6 billion
VAW is an independently-run subsidiary of a German electricity congolmerate
formed by the merger of Veba and Viag, which merged in 1999. ("Who's Who:
Mergers, takeovers in high summer," Financial Times at FT.com website.)
In the 1970s, VAW established its two smelters, both in Germany (Elbewerk
in Stade and Rheinwerk near Neuss) in the 1970s, when it also build the AOS
alumina plant in Stade. Beginning in the 1990s, VAW began exporting
technical support and engineering collaborations at smelters like Alusaf in
South Africa, Novokuznetsk in Russia, and Boyne Island in Australia. (VAW
Aluminium-Technologie GmbH, "Company information," at
http://www.vaw-atg.de/company.html)
VAW's alumina refinery in Stade imports bauxite from the CGB consortium in
Guinea, in which VAW is an investor. (see Basics chapter) VAW also owns
several rolling mills in Europe, and owns a 24% world share in the high
purity aluminum business. It acquired high purity aluminum market leader
Mitsubishi in 1999. (Stephen Johnston, "Aluminium," Mining Annual Review,
March 2000
The company boasts that "from beverage cans and peel-off lids for yoghurt
pots to toothpaste tubes, from packaging for tablets through engine
castings and car body components to roller blinds and printing machines -
in nearly all areas of life, aluminium products made by VAW play a key
role. VAW produces flexible packaging for the food and pharmaceutical
industries, strip and foil mainly go into packaging, automotive,
applications and offset printing or are used as façade cladding.
Furthermore, VAW is the world's leading supplier of aluminium engine blocks
and cylinder heads." ("VAW aluminium AG at
http://www.sovereign-publications.com/vaw.htm)
In October 2000, the Financial Times reported that "VAW is heading for the
auction block, following Viag's merger with Veba, to form energy group Eon,
which is now
getting rid of non-core interests.... VAW, whose most attractive assets are
probably its half-share in the Norf rolling mill and its auto engine block
casting business, is estimated to be worth Dollars 2.5bn-Dollars 3bn. Norf
is the largest rolling mill in the world, while VAW is the world leader in
aluminium engine blocks." (Gillian O'Connor: VAW continues to attract much
attention," Financial Times, October 25, 2000)
#11 - Dubal (U.A.E.)
Dubai Aluminium Company Limited
P.O.Box : 3627 Dubai
Tel : 04-8846666/8022926
Fax : 04-8846919
CEO: Ian Rugeroni
Website: www.dubal.co.ae
1998 revenues: Dh2.46 billion
"The starting point for us was indubitably the vision of Dubai's Ruler, His
Highness the late Sheikh Rashid bin Saeed Al Maktoum who decreed that a
smelter should be built," asserts Dubal CEO Rugeroni. "With the leadership
of HH Sheikh Hamdan bin Rashid Al Maktoum, Chairman of Dubal, and our Vice
Chairman, H.E. Mohammed Al Abbar, supported by a dedicated management team
and a workforce of over 2000 employees, we have been able achieve much of
what was originally planned." ("Productivity in Partnership at
http://www.sids.com/update/april98/dubai.htm)
Dubal Aluminium (Dubal) opened in 1979 and expanded from 375,000 to 536,000
tons of capacity in 1999, making it the third largest smelter in the world.
(Bricad Associates website, http://www.bricad.com/aluminium/dub/index.html;
Dubal website, www.dubal.co.ae; "Dubal Sales, Output Break Records," May
25, 1999 at www.useinteract.com)
The company's reach is transnational. Dubal is pondering the construction
of a new $2.5 billion, 480,000 ton smelter in Oman and provides technical
services to the 200,000 tpy Al-Mahdi smelter in Iran. The government of
Iran owns a majority share of Al-Mahdi, with the rest owned by
International Development Corp. of Dubai. International Development Corp.'s
investors included fugitive billionaire Marc Rich, U.K. construction
company George Wimpey, Caradel Investments, and former UAE ambassador to
London, Mahdi Al-Tajir. (Mining Annual Review, June 1992; Rasha Owais,
"Dubal studies Oman smelter project," Gulf News, April 10, 1999)
It imports 60,000 tonnes of alumina every three weeks from Alcoa's Kwinana
refinery in Western Australia. Australian Trade Minister Mark Vaile met
with Dubal's Rugeroni last year, after the CEO expressed concerns over
labor unrest at Kwinana. A ministry press release reported that "meeting in
Dubai with senior managers of Dubal, Mr Vaile said Australia was fully
committed to meeting its alumina supply obligations to the company with a
contracted value of $1.4 billion over the next eight years."
"All our export customers, especially a smelting operation such as Dubal,
must have reliability of supply. We simply cannot afford to have our
reputation as a reliable supplier damaged. The jobs of Australians in vital
export industries must not be put at risk by the selfish action of others,"
said Mr. Vaile. (Australian Minister for Trade, "Reassurance on alumina
supplies," media release, March 3, 2000)
#12 - Ormet (USA)
Ormet Primary Aluminum Corporation
1233 Main Street, Suite 4000
Wheeling, WV 26003
Phone: (304) 234-3900
Toll Free: (800) 331-6950
Fax: (304) 234-3929
Phone: 304-234-3900
CEO/Chairman: R. Emmett Boyle
1998 revenues: $780 million
Website: www.ormet.com
R. Emmett Boyle owns 100% of Ormet, which was established in 1956 by Olin
Corporation and Revere Copper and Brass, Inc. "to produce primary aluminum
for sale in equal measure to the parent companies." In 1986, Boyle bought
out the company from its then-owner, Alusuisse, and restarted its shuttered
Burnside, La., alumina refinery.
. (http://www.ormet.com/ormet/history.html)
Since 1957, Ormet has operated an alumina refinery in Burnside, La., and a
smelter in Hannibal, Ohio. Production capacity at Burnside could reach 1
million tons under a modernization program launched in 1999.
(www.ormet.com; Plunkert, 2000)
According to the United Steelworkers of America, Boyle secretly funneled
money in a 2000 campaign against the re-election of an Ohio judge that he
views as pro-union.
"The Ohio Elections Commission is investigating charges that a committee,
which includes the leaders of two companies that have a history of locking
out Steelworkers, violated campaign financing laws in the November state
supreme court races," reported the USWA in November 2000.
"The smear campaign against an Ohio Supreme Court justice who has sided
with labor's causes was financed by a secret $3 million slush fund that
included solicitations by Emmett Boyle, who locked out Steelworkers at
Ravenswood Aluminum in 1990. Boyle is now heard of Ormet Corp., where
Steelworkers have been working without a contract since May 31, 1999.
"Resnick won reelection handily and many observers feel the campaign
spearheaded by the Ohio Chamber of Commerce did her more good than harm.
Steelworkers joined with other unions in Ohio to raise money to help
Resnick overcome the Chamber's onslaught.
In that campaign, television ads suggested that Justice Resnick took bribes
from special interests.
"The Ohio Chamber was able to raise that amount of money ($3 million) in
part because donors were assured that their contributions would be kept
secret. Some Ohio businesses also received calls from Republican Gov. Bob
Taft soliciting money for the smear campaign.
"Shortly after the election, the Ohio Elections Commission found 'probable
cause' that the chamber committee violated the state's election laws by
refusing to release the names of contributors to the anti-Resnick campaign
and for suggesting Resnick made decisions based on campaign contributions.
A hearing will be held sometime after the first of the year to investigate
the charges further. ("Enemies of Labor under investigation," Steelabor,
Nov-Dec. 2000 at http://www.uswa.com/steelabor/NovDec00/aksmear.htm)
Other Notables
Hoogovens / Corus Group
Corus Group plc
15 Marylebone Road
London, NW1 5JD
England
Tel.: 020 7 314 5500
Fax: 020 7 314 5600
Chairman: Brian Moffat
Hoogovens Aluminium BV
Postbus 10000, 1970 CA,
IJmuiden Vondellaan 10
1942 LJ Beverwijk
Netherlands
Tel: 0251-499108
Fax: 0251-470220
Giant British Steel and Hoogovens, a Dutch aluminum and steel producer,
merged in 1999 and created the largest steel company in Europe, named
Corus. According to the Financial Times, "Most industry observers expect
the British Steel-Hoogovens merger eventually to prompt the disposal of
Hoogovens' aluminium interest." ("Who's Who: Mergers, takeovers in high
summer," Financial Times at FT.com website; Stephen Johnston, "Aluminium,"
Mining Annual Review, March 2000)
Hoogovens imports alumina from Suriname, owns a 97,000 ton smelter in
Delfzijl, Netherlands, and a 80,000 ton smelter in Voerde, Germany, and has
aluminum divisions in Belgium and Quebec. (Tom Stunza, "Aluminum merger and
acquisition activity accelerates," Purchasing Magazine, Oct. 7, 1999)
WMC Ltd.
WMC Ltd.
(formerly named Western Mining Corporation)
360 Collins St. 31st Floor
Melbourne, Victoria 3000
Australia
Phone: 61-3-602-300
CEO: Hugh Morgan
WMC holds an interest in the Suralco bauxite mining joint venture, with
Alcoa and Billiton, in Surinam. In 1994, WMC entered into a global alumina
refining joint venture with Alcoa, and owns 40% of the venture, Alcoa World
Alumina & Chemicals. When the two companies combined alumina operations,
the venture had anual revenues of close to $3 billion a year.("Alcoa
Acquires Discovery Alumina Chemicals Business," Industrial Specialties
News, July 10, 1995)
Prior to Alcoa's purchase of Reynolds, the WMC/Alcoa venture controlled
more than 30 percent of global alumina capacity. (American Metal Market,
January 26, 2001)
In October 2000, when asked about the implications of the Alcoa-Reynolds
combine, WMC's chief executive officer, Hugh Morgan replied , "The direct
implication is AWAC acquired some additional bauxite resources in Africa
and South America. Under the AWAC agreement between Alcoa and WMC,
anything involving the acquisition of bauxite, alumina or alumina chemicals
goes in the AWAC pot. Also, the justice department ruling means AWAC cant
purchase additional alumina capacity thats sold to the traded marketplace
(i.e. the material thats not vertically integrated). But this doesn't limit
internal expansions. AWAC has tremendous growth opportunities." ("Open
Briefing WMC CEO Morgan on Record Profit," Australian Associated Press
Company News, Aug. 15, 2000)
WMC is also a major miner of uranium, gold, and nickle. ("The Bechtel
Truth - Notes for the Alternative AGM of WMC," Roxby Action Collective,
Nov. 20, 1997 at http://www.sea-us.org.au/roxby/bechteltalk.html)
Marc Rich
Marc Rich & Co. Holding
Baarerstrasse 53
6304 Zug
Switzerland
Phone: 041/709.08.44
Fax: 041/709.08.29
Billionaire Marc Rich lives in Zug, Switzerland, where he moved in 1983
just before the U.S. government gained an indictment against him for
evading corporate taxes of $48 million, fraud, and circumventing the U.S.
oil embargo against Iran. He renounced his U.S. citizenship, paid a $113
million settlement check, but remained a fugitive until President Bill
Clinton pardoned him in a controversial last-hour order in January 2001.
Rich is a secretive tycoon who holds the nickname "Aluminum Finger."
("Aluminium Finger" reference from untitled article, Evening Standard, Jan.
30, 1996)
In addition to his aluminum interests, Rich "also has been accused of
smuggling oil to South Africa during apartheid and of selling embargoed
Iraqi oil," reported The Nation (Feb. 12, 2001). The New York Daily News
(Jan. 28, 2001) said Rich "went from New York University dropout to
mailroom clerk to modern-day alchemist, turning lead and aluminum - and
smuggled oil - into pots of gold.... (Although there is) no conclusive
proof, Rich and his shadowy companies are said to have looted gold from the
collapsing Soviet Union, sold Korean weapons to Iran, illegally cornered
the tin and aluminum markets, made off with chunks of the Gross Domestic
Product of Finland and Romania and jumped into bed with the Russian mafia."
(Helen Kennedy, "Ruthlessness is Rich's game," New York Daily News, Jan.
28, 2001)
"With a potent combination of trading genius, nerves of steel and
tissue-thin morals, Rich became a billionaire, buying and selling oil and
metals in fiendishly complicated maneuvers," the Daily News explained.
(ibid).
Rich pressed his case to President Clinton in fear of possible retribution
from former Alcoa president O'Neill. O'Neill is President Bush's new
Treasury Secretary. According to the Wall Street Journal (Jan. 23, 2001),
"People close to Mr. Rich said the need for a pardon took on an added sense
of urgency with the impending change of an administration. Of particular
concern to Mr. Rich was the appointment of Paul O'Neill as Treasury
secretary... One of Mr. Rich's metal-trading company's scooped up Alcoa's
bauxite and alumina production in Jamaica. 'Rich was frightened O'Neill
would get the government to come after him again,' a person familiar with
the federal manhunt for Mr. Rich said. Treasury officials said they
wouldn't comment on the matter."
In the mid-1980s, when demand for aluminum dropped, Alcoa closed the
Jamalco bauxite mining/alumina refining complex in Clarendon Parish. In
response, the Jamaican government signed a 10 year suply contract with Rich
and assumed responsibility for production at Jamalco. In the 1990s, with
alumina markets tightening, Alcoa resumed its role as managing partner of
Jamalco. (Canute James, "Jamaica metals market improves - Bauxite,"
Financial Times, Feb. 12, 1990; "Discover Mandeville" at
http://discoverjamaica.com/gleaner/discover/tour_ja/tour7.htm)
Rich shipped bauxite to his alumina refinery, Vialco, on St. Croix, U.S.
Virgin Islands. Vialco was sold to Alcoa in 1995. (Bob Regan, "Alcoa
refinery spared by Hurricane Lenny," American Metal Market, Nov. 19, 1999)
In 1983, Rich opened an office in Moscow. Soon, he supplied the Soviet
Union with grain in contrvention of U.N. embargo over the Afghanistan war,
and heavily traded in aluminum.. By 1992, Marc Rich engaged in an estimated
$3 billion of trade in the countries of the former Soviet Union. Former
Russian Trade Minister Oleg Davydov attributed the rising corruption in his
country in part to people like Marc Rich. When "legal channels became
inconvenient [for Russia's new businessmen], there appeared a huge mass of
foreign entrepreneurs, mostly crooks like Marc Rich, who began to teach
us various ways of taking the money out through offshore companies. That
is what bred our whole system of corruption and criminality," he told
Forbes magazine in 1998. (Kirill Vishnepolsky, "Glencore International
strikes root in Russia," RusData DiaLine - BizEkon News, April 30, 1996;
Oleg Davydov, "Tomorrow they will take up arms: A chat with Russia's former
trade minister," Forbes, Sept. 7, 1998; "El drama en el sector del
aluminio," June 27, 1998, on eluniversal.com,
http://noticias.eluniversal.com/1998/06/27/OP15.shtml)
Rich bought Kaiser's smelter and rolling mill in Ravenswood, West Virginia,
in 1988; two years later, he locked out the plant's unionized workers. In
one of labor's shining moments of the early 1990s, Steelworkers picketed
Rich's home in Zug, chased him with a puppet of West Virginia labor icon
Mother Jones, and blocked his purchase of a smelter in Czechoslovakia.
("Pardon draws protests; Rich fled after indictment, was involved in Kaiser
deal," Spokesman Review, Jan. 26, 2001)
Rich helped to leverage Hurwitz' takeover of Kaiser Aluminum in 1988 when
he agreed to purchase $400 million worth of Kaiser's aluminum. (Cherney)
He was an investor in the International Development Corporation (IDC) of
Dubai, United Arab Emirates, which built the Al-Mahdi smelter in the
mid-1990s. In 1990, IDC proposed a smelter in Algeria, named Medial.
Rich divested himself of many of his aluminum holdings in March 1993, when
he agreed to sell his shares in Marc Rich & Co., which became Glencore
International. In 1994, Rich sold his last 25% stake in Glencore. ("Market
news," The Mining Journal, Nov. 11, 1994)
In 1996, Rich returned to commodities trading, operating out of a company
named Marc Rich & Co. Holding. According to the Financial Times, "Rich said
he had no doubt that there was room for another commodity trading business,
despite the rise of other physical giants in the intervening period,
including AIOC, Trans-World Metals, the Balli Group and Glencore, most of
which have developed strong business links with the aluminium industry -
the metal he was famed for trading in. 'We plan to be active in aluminium,
copper, zinc, lead, nickel, metal and concentrates, in addition to crude
oil, petroleum products, grain and coal. Obviously, I feel the prospects
for a company trading in commodities is good,' he said. (Rachel Carnac,
"Rich return sets the markets buzzing," Financial Times, February 9, 1996)
In 1998, Rich expressed an interest in aquiring Noranda's share of the
Friguia bauxite/alumina operation in Guinea, according to Mining Annual
Review (Dec. 1999). Noranda and the other foreign partners, Alcan and
Hydro, sold their 51% stake to the Guinean govenrment in late 1998. The
government, prompted by the World Bank (see Banks chapter), opened bids for
an 85% strake in Friguia. It pre-selected Marc Rich, Anglo American,
Comalco, and Kaiser to bid. In February 1999, however, the government put
the bidding on indefinite hold. Friguia's managers have also been courting
investment from Iran. Iran is seeking bauxite and alumina for its two
smelters, one of which Marc Rich helped to develop. ("New delay in Friguia
privatization," Africa Energy & Mining, Feb. 17, 1999; "Four pre-qualified
for Friguia," Africa Energy & Mining, Dec. 2, 1998)
Chapter IV. Multilateral and bilateral financial institutions
As we have seen with other energy-intensive industries (see EBRD, two WB
reports), multilateral development banks and agencies funded by industrial
governments are helping to finance the aluminum industry’s global
expansion.
Not coincidentally, this industry, worldwide, is dominated by transnational
corporations based in the countries that are financing their power plants,
mines, refineries and smelters. National development banks help
corporations based in their country sell equipment to foreign aluminum
operations and gain ownership stakes in old and new infrastructure.
These institutions have poured over $3 billion into dams and other power
plants that fuel aluminum smelters, into structural adjustment and other
programs designed to open bauxite mines, alumina refineries, and smelters
to foreign investors, and into feasibility studies and equipment sales by
Western corporations.
Focus on Slovak Rep./ Iran smelters
The European Bank for Reconstruction and Development, a multilateral aid
agency funded and managed by Western governments, agreed to finance an
aluminum smelter refurbishment and privatization in the Slovak Republic in
1994. The Slovalco, or ZSNP, operation doubled its capacity to 132,000
tons. The old smelter, in turn, may be shipped to Iran.
The EBRD loaned Slovalco $110 million in three parts beginning in July
1994. Part of the loan financed an investment agreement in which Hydro
Aluminium and EBRD control 10 percent ($15 million each) of Slovalco’s
equity. It was EBRD’s biggest private sector loan to date. The German and
Dutch governments, and the European Union’s PHARE program, financed
environmental studies and community outreach programs.
The EBRD hailed the agreement as "the centerpiece of the overall
restructuring and privatization of ZSNP in which two inefficient and
polluting smelters will be closed down and other major facilities will also
be closed down or upgraded to meet Slovakian and EU environmental
standards. The new smelter, which will provide employment opportunities for
over 500 people in Ziar, will be one of the most efficient in the world."
(EBRD press release, "EBRD and Slovakian Aluminium smelter sign loan
agreements, July 12, 1994)
The old Slovalco smelter had a poisoned past. In 1996, the Financial Times
reported that a "mountain of red and brown bauxite waste still dominates
the valley approach to the [Slovalco] aluminum works… the legacy of decades
of environmental neglect. Inside the old, inefficient and polluting
smelters have been closed down… [replaced by] the gleaming white and gray
buildings of one of Europe’s most modern aluminum smelters." (Financial
Times, Oct. 23, 1996)
"The new plant will be energy efficient and safe, and will meet good
international environmental standards," boasted the EBRD. "The shut-down of
the existing smelters, together with the start-up of the new smelter, will
have a major beneficial effect on occupational health and external air
quality." ("EBRD industrial projects with significant environmental
benefits: some examples" at
http://www.ebrd.ro/english/enviro/envpub/envfacts.htm/indproj.htm)
But while the EBRD investment replaced chronically-polluting Soderberg
potlines
at the notorious plant with modern pre-bake cells, the old cells may move
to a proposed new smelter on Iran’s Qeshm Island. (Aluminium Today, August
1997)
In 1994, the Center for International Environmental Law (CIEL)termed the
EBRD loan "an especially disturbing example (of) funding of a major
polluter... ZSNP will remain a significant source of pollution in the
region, even though the Bank loan will finance improvements in the
smelter's environmental performance.
"The ZSNP plant, utilizing approximately 10 percent of the total energy
produced in Slovakia, also puts a severe strain on Slovakia's overburdened
electricity generating capacity, supporting the government's contention
that the nuclear power plant at Bohunice, one of the most dangerous in
Central and Eastern Europe, cannot be closed until its capacity can be
replaced....
"The (EBRD) environmental staff submitted a document to the Directors just
prior to the Board's decision to approve the controversial ZSNP loan. CIEL
discovered that the document had been altered to downplay the environmental
impacts of the project. Later communication with Bank staff revealed that
while some alterations were unintentional, others were deliberate. It is
impossible to know whether the misrepresentations in the document
influenced the Board's decision to approve the project. Nevertheless, such
alterations breach the trust placed in Bank staff by the Directors."
(Donald M. Goldberg and David B. Hunter, "EBRD's Environmental Promise: A
Bounced Check?," Center for International Environmental Law, December 1994)
In a 1995 follow-up report, CIEL said called the Slovalco smelter "one of
the region's largest polluters. A bauxite waste site leaches heavy metals
into the soil and groundwater, and the existing factory emits dust, SO2,
NOx, CO, and fluorides far in excess of Slovak and EC air emissions
standards. Off-site testing has revealed high concentrations of
benzopyrene, arsenic, molybdenum, copper, nickel and chromium. Health
problems, including congenital defects, allergies, and thyroid and lung
diseases, are on the rise throughout the region.
"Due to the highly polluting and energy-intensive nature of primary
aluminum production, Slovak environmentalists favored either converting the
plant to secondary aluminum production or closing the plant altogether.
They also argued that the plant made no economic sense. Ideally, for
aluminum production to be economically competitive, a cheap source of
energy, labor, and raw materials should be available. With the exception of
cheap labor, Slovakia has little competitive advantage on the international
aluminum market.
"Nevertheless, the EBRD decided to pursue the project, which already had
been rejected by the World Bank and a number of private investors. Despite
strenuous objections from environmentalists, it was given fast track
status, a protocol that is not provided for in the Bank's Environmental
Procedures. Most of the procedures for public participation were curtailed:
formal notification to the public about the ZSNP project, public scoping,
and public meetings were dispensed with. Bank staff did conduct a pro forma
meeting with a small number of environmentalists a few days before the
project was submitted to the Board, but by that time it was not likely the
project would be altered.
"The ZSNP project demonstrates that, when faced with financial pressures,
the Bank is willing to forego at least some of its environmental due
diligence. A sustainable development policy and stronger environmental
procedures are urgently needed to help the EBRD withstand such pressures
and ensure that each project receives the appropriate level of
environmental analysis and public consultation." (CIEL, "The European Bank
for Reconstruction and Development: An Environmental Progress Report,"
1995, at www.ciel.org)
Focus on former Soviet Union, aluminum, and corruption
Since the fall of the "Iron Curtain," aluminum has flooded Western markets
from the former Soviet Union. Commodities traders Marc Rich and Trans-World
Metals fueled this flood. Foreign governments also got into the act.
As a 2000 U.S. Department of Commerce study noted, "IBRD (the World Bank),
EBRD, the U.S. Export-Import Bank and other countries’ export credit
agencies have been active in attempting to support foreign equipment sales
to Russian aluminum producers." (Nick Mikhailov, "Russia: Production
equipment for the aluminum industry," Business Information Service for the
Newly Independent States (BISNIS), U.S. Department of Commerce, July 31,
2000, at http://bisnis.doc.gov/bisnis/000817rsalum.htm)
The involvement of these government agencies in former CIS states’ smelters
thrusts these officials shoulder-to-shoulder with dangerous company. The
Russia aluminum industry is rife with tales of corruption, the black
market, and even killings.
"Over the years, the Russian media, in particular, has pursued telltale
trails leading to connections with the Russian Mafia, bribery, and unsolved
cases of assassination of journalists and people related to the aluminum
industry," reported American Metal Market in January 2001 ( Christian Kohl,
"Trans-World probe deepens," American Metal Market, Jan. 19, 2001)
- Globalization and Corruption
The globalization of the former Soviet Union’s aluminum industry can be
traced to the year 1983, when fugitive commodities trader Marc Rich (see
Corporate chapter) opened an office in Moscow. Soon, he supplied the Soviet
Union with grain in contravention of U.N. embargo over the Afghanistan war,
and heavily traded in aluminum.
By 1992, Marc Rich engaged in an estimated $3 billion of trade in the
countries of the former Soviet Union. Former Russian Trade Minister Oleg
Davydov attributed the rising corruption in his country in part to people
like Marc Rich. When "legal channels became inconvenient [for Russia's new
businessmen], there appeared a huge mass of foreign entrepreneurs, mostly
crooks like Marc Rich, who began to teach us various ways of taking the
money out through offshore companies. That is what bred our whole system of
corruption and criminality," he told Forbes magazine in 1998. (Kirill
Vishnepolsky, "Glencore International strikes root in Russia," RusData
DiaLine - BizEkon News, April 30, 1996; Paul Klebnikov, "Tomorrow they will
take up arms: A chat with Russia's former trade minister," Forbes, Sept. 7,
1998; "El drama en el sector del aluminio," June 27, 1998, on
eluniversal.com, http://noticias.eluniversal.com/1998/06/27/OP15.shtml)
By 1994, when Rich sold his stake in the trading business that was renamed
Glencore, his company was eastern Europe’s largest Western supplier of
grain, which he obtained mainly by bartering aluminum from smelters in the
former Soviet Union. (Stuart Penson, "Marc Rich & Co. name changed for
'morale,’" American Metal Market, Sept. 2, 1994)
As Rich’s inference transferred to the Glencore group, then faded in the
mid-1990s, two brothers in London filled the gap. David and Simon Reuben
founded Trans-World Group (a/k/a Trans-World Metals) in 1977. After the
disintegration of the Soviet Union, Trans-World forged an alliance with
another set of brothers, Lev and Mikhail Chernyi (also spelled Chernoi and
Chernoy), whose Moscow-based Trans-Seas Commodities came to control Russian
aluminum exports.
The Chernyi brothers, said Minister Davydov, "gained control of aluminum
exports at a time when aluminum cost $ 2,000/ton on world markets but could
be bought at $ 500/ton
inside Russia. All the producers became deeply indebted to the brothers,
who made deals with the plant directors to acquire aluminum at the Russian
price. Which they then sold at the world price. The tragedy is that if the
privatized companies were state enterprises today, they would be recording
good profits, they would be paying taxes, paying workers' wages, investing
in their plant and equipment. But these so-called owners arrived, and what
happened? There are no profits. No tax payments. The plant and equipment
are getting worn out. And the money goes abroad." (Forbes, Sept. 7, 1998)
In 1995, Trans World took control over the Gyndzha alumina plant and
Sumgait aluminum plant in Azerbaijan from Glencore. The shifting business
climate brought this thought from a Glencore executive, according to
BizEkon News: "One of Glencore Moscow office executives recently pulled no
punches in contending that his company would still be doing deals in Russia
even if a Hitler or someone came to rule it, given Glencore's prodigious
track record of business collaboration with regimes of any stripes and
shades. (Kirill Vishnepolsky, "Glencore International Strikes Root in
Russia," RusData DiaLine - BizEkon News, April 30, 1996)
By early 1998, Trans World controlled between 40% and 70% of Russia’s
aluminum industry. Its estimated global sales of $6 billion per year made
the small firm, fleetingly, the third largest aluminum company in the
world. Then, the Chernyi brothers severed ties with their London partners.
By 2001, Trans World had exited from most of its business in the former
Soviet Union. (Matthew Brzezinski, "Kiev’s dreary hotels offer microcosm of
reform failures," Wall Street Journal, April 16, 1998; American Metal
Market, Jan. 19, 2001)
As Trans World faded, other so-called "aluminum barons" rose, including
politicians Anatoly Bykov and his Krasnoyarsk Enterprise and Anatoly
Chubais and his Russian Joint (or Unified) Energy Systems. (Mining Annual
Review, March 2000)
Other players in Russia’s newly-privatized aluminum industry included Trans
CIS Commodities, Renova, Rial, Al-Invest, Mikom, AIOC, Hunter Douglas,
Metall-Gesellshaft, Pechiney, Gerald Trade, and Daewoo. (Delovoy Mir, April
13, 1995)
The aluminum industry remained a collection of feudal-like enterprises
until the late 1990s, when Siberian Aluminium (Sibersky) began to battle
the Chernyis, and seized control of many smelters.
The battle for control of the former CIS’ aluminum industry took many
forms. Government officials began accusing Trans-World of misconduct
beginning in 1997, when Russian officials investigated allegations that
Trans-World Metals defrauded the central bank and sponsored violence.
Russian Interior Minister Anatolii Kulikov raised the specter of "the
current criminal situation in the non-ferrous industry" when he told the
country’s Parliament about the need to curb western corporations’
influence. He said gang leaders controlled the Krasnoyarsk and Bratsk
smelters. (Mining Journal, June 5, 1998; "Russia Mining," Cambridge
International Forecasts Country Report, December 1, 1999)
Also during 1997, Russian officials alleged that the general director of
the world’s second-largest smelter, the 749,000 ton Krasnoyarsk smelter,
failed to repatriate $20 million from an alumina deal. (Mining Journal,
June 5, 1998)
In 1998, the government of Kazakstan ousted Trans-World from its management
position at the 1.1 million ton Pavlodar alumina refinery, accusing the
company of "irregularities, tax evasion and failing to act in the best
interests of shareholders."
As the charges intensified, Trans-World reportedly offered to sell some of
its interests to transnational giant Billiton. (Mining Journal, June 5,
1998)
Violence has ripped at the region’s aluminum industry. In Tajikistan,
government and rebel forces based in Uzbekistan have battled for control
over the Taduz smelter, one of the world’s largest. (see Human Rights
chapter). In Russia, explosives blew outside the Bogoslovsk smelter’s
administrative offices in September 1997. An official called it "an act of
routine revenge." (Mining Journal, June 5, 1998)
"The 1994-1998 period in the Krasnoyarsk region has been dubbed the "Great
Patriotic Aluminium War", in which local mafia and factory directors were
sucked into a bloody battle for control of the smelter," reported the
Financial Times in 2000. "Dozens died in a series of murders, including
local bankers, crime bosses and factory officials. The victims included
both allies and competitors of Trans-World, though David (Reuben) angrily
denies any hint that they or their partners had any role in the violence.
‘There is absolutely no truth to any of the allegations that Trans-World
has been involved in any illegal activity in Russia,’ he says. (Charles
Clover and William Hall, "Aluminium ‘risk-taker’ changes tack in Russia,"
Financial Times, April 12, 2000)
Russian authorities invaded the offices of Bykov and Krasnoyarsk in April
1999. In court, they accused Bykov of "laundering money obtained by illegal
means." (Mining Annual Review, March 2000)
In June 1999, Bykov, Chernoy/Trans-World, and Visaly Anisimov’s
TrustConsult fought for control over the Kransoyarsk smelter. While Bykov
faced prosecution from Russia, Chernyi had his own troubles. According to
the Mining Annual Review, "Swiss, US and British police were also
reportedly investigating Lev Chernoy over money laundering and organized
crime activities."
In the winter of 1999-2000, oil magnate Roman Abramovich led a group that
took control of the two largest smelters in the world: the 870,000 ton
Bratsk and 835,000 ton Krasnoyarsk plants. He bought the controlling shares
from Chernoy and Trans-World. (Mining Annual Review March 2000)
That season, car dealer Boris Berezovsky reportedly purchased the fifth
largest smelter in the country, the 284,000 ton Novokuznesk plant.
(Mikhailov; Mining Annual Review, March 2000)
At the same time, Sibirsky Aluminum, led by Oleg Deripaska, built a holding
company around the 400,000 ton per year Sayan aluminum smelter. Reynolds
(now part of Alcoa) has held a 3% stake in Sibersky.
Berezovsky and Abramovich formed an alliance that, within a month, absorbed
Deripaska’s Sibirsky Aluminum. The new umbrella group, named Russian
Aluminum (or Russky Aluminum) dominates the country’s industry. Its five
smelters, with a combined capacity of over 2.1 million tons of production,
generate annual sales of $3.4 billion, according to the U.S. Department of
Commerce. (Mikhailov)
A Russian newspaper tied the buyout to a power struggle between the
aluminum barons and politicos Chubais and Vladamir Putin. "These purposeful
and even aggressive aluminum market deals indicate that Berezovsky,
Abramovich and Chernyi have gone on the attack: they have united in order
to concentrate the ownership of vast strategically-significant assets. They
are doing this in order to kill several birds with one stone," claimed the
Moskovskie Vedomosti in February 2000.
"Firstly, they want to diminish the influence on the GDP of groups
controlled by their main opponent, Chubais; thus also reducing his chances
of heading the government or
getting one of his people into that post. Secondly, they want to control
the aluminum sector as well as the oil sector, which would give them
influence over the fundamental natural resources sectors of the Russian
economy. Thirdly, of course, it's a question of personal security.
"Having despaired of reaching an agreement with the acting president now,
and fearing that after the election Putin will initiate a new
redistribution of property, Berezovsky, Abramovich, and the Chernyi
brothers want guarantees of their own security and the security of their
business interests. They figure that Putin will have no choice; he will be
forced to provide guarantees (and concessions) for a single favor: he will
not have to sit down at the negotiation table with several odious
oligarchs, as Boris Yeltsin once had to do. Neither would this be
acceptable to Putin himself; the head of state is unlikely to meet with the
Trans-World Group boss, who has a very shady reputation. Berezovsky would
be a different matter - he is, after all, a member of parliament...
Basically, this is blackmail. Ordinary, blatant blackmail. They are showing
Putin that they aren't afraid of him." ("Behind the aluminum deal,"
Moskovskie Vedomosti, February 2000)
Russian Aluminum wants to grow transnationally, particularly into
infrastructure developed by the former USSR. Its targets included the
refineries in Ukraine, Kazakhstan and Romania, and coal mines in Ukraine
and Kazakhstan. (Mikhailov)
Two other large holding companies, SUAL-Trustconsult and NorthWest
Aluminum, were forged out of the on-going industry-wide restructuring in
2000.
SUAL-Transconsult is the product of a three-way merger, in early 2000,
between the Siberian-Urals Aluminum Company, TrustConsult, and Renova. The
new combine owns three bauxite mining companies and four smelters including
the 158,000 ton Bogoslovsk, 252,000 ton Irkutsk, 80,000 ton Urals, and
68,000 ton Kandalaksha plants. (Mikhailov)
NorthWest Aluminum is a holding company proposed by eight aluminum
companies in the Leningrad region. The nascent firm includes the 24,000 ton
Volkhov and 129,000 ton Volgograd aluminum plants and two alumina producers
(Boksitogorsk Alumina and Pikalyobskoye Alumina). Alutech of the U.S. hopes
to set up a 200,000 ton smelter in the region. (Mikhailov)
A recent Dept. of Commerce report said the reorganization held promise for
more Western equipment sales, but added that "the circumstances surrounding
these mergers were highly non-transparent and the identity, objectives and
financial structure of the new management is not sufficiently clear to
reach a judgment about their plans for the new conglomerate." (Mikhailov)
U.S. companies supply about one-quarter of the equipment imported by the
Russian aluminum industry. Suppliers include Alcoa, Alutec, Kaiser (two
potroom cell upgrades to Krasnoyarsk), Loma Machine Mfg., Pyrotec Inc. and
Wagstaff Inc. According to the U.S. Dept. of Commerce, "the most
aggressive non-American players in the Russian aluminum equipment market"
are: Germany’s Mannesmann, Schloemann, Wagner, and VAW (designed an upgrade
at Novokuznetsk); France’s Pechiney and Clecim; Italy’s Hunter Midia,
Continuus Properzi, and Mino; Britain’s Megatherm and JMC; Japan’s Itochu
and Mitsubishi Heavy Industry (they want to finance an expansion at Sayan);
and, Austria’s Ebner. (Mikhailov)
- Still in turmoil
The aluminum industry in Russia remains tumultuous after the
consolidations. Men who shaped the post-Soviet industry have been charged
with murder, money laundering, and collusion with the Mafia.
On Oct. 4, 2000, Agence France Presse reported that Russian police arrested
Bykov, "once known as Russia's ‘aluminum baron,’ in the Siberian city of
Krasnoyarsk on Wednesday while investigating the murder of a local
underworld figure... Bykov is accused of several crimes, including fraud,
money laundering and being implicated in another murder. Bykov was arrested
at his home Wednesday on suspicion of involvement in the September 29
murder in Moscow of Pavel Struganov... Struganov, suspected of being a
leading figure in Krasnoyarsk criminal circles, was killed along with
another man in broad daylight in central Moscow." ("Russia's former
‘Aluminum baron’ returns to prison, Agence France Presse, Oct. 4, 2000)
Earlier in the year, Bykov was extradited from Hungary to face the other
charges, and was released on bail in September. ("Two businessmen killed in
central Moscow," Agence France Presse, Sept. 29, 2000)
An April 25, 2000, article in Noviye Izvestia asked, ". Who is he, Anatoly
Bykov: the godfather of the aluminum mafia, or just another victim of
political showdowns and property redistribution? And most importantly, what
will happen when Bykov starts talking? His testimony is expected to be a
real blow to many people in high places: Anatoly Bykov's personal friends
and enemies, partners and competitors include quite a few politicians in
the top echelon of power, as well as important government officials,
businessmen, financiers and even officials of various security and
law-enforcement agencies. Hence the speculations that there will be an
attempt to get Bykov "out of the way" now that he's back in Russia. If that
is really so, we can expect surprises not so much from his enemies as from
his "friends," since Bykov undoubtedly has suitcases full of "exclusive
dirt" on them. The criminal world, which lives by its own laws, also has
grievances against Anatoly Bykov.
"Here's a quotation from a letter to him from crime kingpin Vladimir
Tatarenkov, a.k.a. the Tatar, who was recently arrested in Greece and is
now giving testimony in a Russian prison: ‘Dear Anatoly Petrovich! I have
recorded numerous videocassettes telling about the way you have been living
for the past few years, and about how much blood was shed so that you could
become what you are now. Don't you have nightmares about the people who
died at your orders, though not by your hand? . . . The people who elected
you would be awfully surprised to find out who they voted for. Russia has
never been fond
of murderers.’" (Yevgeny Latyshev, "Who has an interest in seeing Bykov
eliminated?," Noviye Izvestia, April 25, 2000)
In Dec. 2000, two trading companies, Base Metal Trading of Switzerland and
Alucoal of Cyprus, filed a $2.7 billion suit in U.S. District Court against
Russian Aluminum, Sibersky Aluminum, Deripaska, and Mikhail Chernyi.. The
companies claimed that the Russian aluminum giants "joined with the
Izmailovo Mafia to illegally monopolize the metals market left vulnerable
after the collapse of the Soviet Union. They allege abuses that violate
Racketeer Influenced and Corrupt Organizations Act, and they claim to have
suffered $ 900 million in losses," according to the National Law Journal.
("3-nation aluminum suit," National Law Journal, Jan. 8, 2001)
"The complaint enumerates specific allegations of murder, extortion, and
mail and wire fraud, among other criminal acts allegedly orchestrated by
the defendants and carried out in some instances by the
Izmallovo-Russian-American mafia," reported Mining Journal. "The core of
the claim is that, when the defendants were unable to negotiate a legal
purchase of NKAZ, they resorted to extortion to seize control of the
smelter and a greater portion of its trading profits. Amongst other
tactics, the complaint says that the defendants enlisted the assistance of
government and judicial officials in pursuing and winning falsified
bankruptcy proceedings" ("Russian Aluminium named in RICO suit," Mining
Journal, Dec. 22, 2000)
"Criminal elements have besieged Russian industry with illegal payoffs,
threats and acts of violence. This case will demonstrate how U.S. financial
institutions are used by criminal, elements to accomplish their purposes.
U.S. courts have the power and opportunity to prevent Russian oligarchs
from using the U.S. banking and commercial systems to facilitate criminal
conduct in other countries," claimed the plaintiffs’ attorney, Robert
Abrams. (Base Metal Trading: Russia's Largest Aluminum Company Named in
US$2.7 Billion RICO Suit," Canadian Corporate Newswire, Dec. 20, 2000)
***** SIDEBAR ******
Forbes on Trans World
The Reuben brothers spoke to Fortune magazine in late 1999. As the Reubens’
Trans World aluminum empire collapsed, Fortune reported on the rise and
fall. The following are excerpts from the Richard Behar’s June 12, 2000,
article headlined "Capitalism in a Cold Climate: The story of Trans World's
aluminum empire is filled with bribes, shell companies, profiteers, and
more than a few corpses. Then again, in today's Russia, that's pretty much
par for the course."
"’Very often the most likely to succeed in these stormy oceans are not the
picture-perfect, clean-shaved, deep-tanned, well-built, and fashionably
attired yachtsmen under the immaculate white sails,’ says Lev Chernoy,
reading from a prepared statement, ‘but unpleasant-looking ugly skippers in
command of a pirate ship. One should not be appalled. These are the laws of
initial capital acquisition’...
"This is the story of how those laws were applied by Trans World, an
enterprise launched by the Reuben brothers, David of London and Simon of
Monaco, in the early 1990s. With the help of two Russians--Lev Chernoy and
his brother Michael--the Reubens built a Rockefeller-style vertical empire
in the former Soviet Union in a few short years. In 1996, Trans World was
hailed as the world's third-largest producer of aluminum, after Alcoa and
Alcan...
.
"Trans World's scope was so vast yet so invisible that it was called ‘a
state within a state,’ with hundreds of constantly shifting shell companies
and tentacles reaching from the Siberian steppe to the shores of Cyprus,
the Bahamas, the Cayman Islands, and ultimately
the U.S., where 30% of the empire's aluminum was sold...
"The Reubens' time in the sun was brief. By 1998 they had lost control of
nearly half their kingdom to former partners. Government investigations in
at least seven nations--along with hundreds of mostly foreign media stories
critical of Trans World--were threatening to take away the rest. Cutting
their losses, the Reubens sold most of their remaining Russian assets a few
months ago....
"In the course of nearly 100 hours of interviews, the Reubens and the
Chernoys contradicted one another so often as to be nearly unintelligible.
Ironically, their attempt at
glasnost, while it generated no smoking gun, has ultimately only
underscored the dirtiness of the world they moved in--and will likely spur
law enforcement agencies to redouble efforts to finish them off. At least
that's FORTUNE's conclusion, especially after our investigation traced
large sums moving from Trans World to firms at the heart of three big
money-laundering scandals that have dominated headlines in recent months:
the Bank of New York case, the Kremlin-Mabetex kickback probe, and the
collapse of YBM Magnex, a Pennsylvania public company launched by Russian
mobsters that was shut down by the feds last year."
The full, lengthy investigative piece on Trans World and the Chernoys can
be found in the June 12, 2000 edition of Fortune magazine.
- Foreign aid and investment in the former USSR
The U.S. Trade and Development Agency was an early backer of foreign
investment in the former Soviet Union’s aluminum infrastructure. In 1994,
the agency gave aluminum industry officials from the former Soviet Union
$24,000 to spend on a visit to the Alumitech 94 convention in Atlanta.
(TDA)
Since then, foreign government bank financing has been proposed or extended
toward many operations in which the aluminum barons have operated.
- Armenia
In 1988, the French government pledged 1 billion francs in financing toward
the modernization and expansion of the 100,000 tpy Kanaker aluminum smelter
in Armenia by the French firm Pechiney. The venture would have given
Pechiney 25% ownership of the plant. The break-up of the Soviet Union, war
in Armenia, and severe pollution caused by the smelter, however, have
conspired to keep it closed in the 1990s. (Ecotass, November 20, 1989;
Financial Times, November 25, 1988; Chemical Business News Base,
January 12, 1989)
- Azerbaijan
A smelter in Sumgait has helped that city obtain the dubious status of "one
of the most polluted cities" in the former Soviet Union. (Mining Journal,
November 14, 1997) "Row upon row of tiny headstones in a children’s
cemetery bear silent testimony to the pollution that has poisoned the
sprawling industrial town of Sumgait, reported Agence
France-Presse last year. (AFP, June 16, 1997) At its operational peak in
the 1980s, a local documentary charged, the Sumgait refinery "poisons
Sumgait’s air basin with 70,000 tons of toxic discharges each year."
(Soviet television, May 11, 1989)
Trans-World Group assumed management of the smelter and an associated
alumina refinery (Gyndzha Alumina) in 1997. Previously, Kaiser (U.S.) and
Interchem (U.K.) planned to invest in the plant, with possible backing from
the EBRD, but backed out in 1996, when they determined that high energy
costs would make their investment unprofitable. (Euromoney Trade Finance
and Banker International, July 31, 1995; Reuter, June 21, 1995)
In April 2000, the Azeri government created the Azerbaijan Aluminum holding
company, which included the Gyndzha alumina plant and Sumgait and Zeiliksky
aluminum plants. In October, it selected Netherlands-based Fondal Metals
over Russian Aluminum and an offshore company named Ansol in bids to
develop the aluminum company. Two other bidders -- Iralco of Iran and
Trans-World -- withdrew their bids, according to Azer-Press.
According to Kommersant, officials of Russian Aluminum and Dutch producer
Hoogovens had never heard about Fondal Metal. "There are two main
versions," reported the newspaper. "First: Fondal Metal represents
interests of British Trans World Group, which used to manage the Gyandzha
alumina plant until 1997. Second: MetallsRussia concern, a metal trading
subdivision of Thai group Sahaviria, is behind Fondal Metal. The group has
substantial industrial assets in Ukraine." ("Azerbaidjan aluminum will
become Dutch" by D.Butrin, Kommersant, October 13, 2000)
- Kazakstan
Trans-World Metals was active in Kazakhstan until it was ousted in 1998. In
1996 and 1997, Trans-World planned to build a 200,000 ton smelter there,
and had Bechtel produce a feasibility study for the smelter’s construction.
According to the Russian news agency Interfax, in 1997 the EBRD was
considering helping to finance a proposed aluminum smelter in Kazakstan,
along with Bechtel, Intec and Alumax. A spokesman said the companies were
attracted by Kazakstan’s cheap electricity, alumina and labor. (Interfax
news agency, Sept. 29, 1997)
,
In December 1997, according to Mining Journal (June 5, 1998), Trans-World
Metals "filed a lawsuit against three of that country’s citizens for
allegedly trying to subvert its operations there, including Pavlodar [an
alumina refinery]. In January 1998, the government ousted all T-WM
appointed management from its metals plants, accusing them of
rregulatiries, tax evasion and failing to act in the best interests of
shareholders."
The Energy and Aluminum newsletter reported in 1998 that "although
Trans-World Group said last June that it would build Kazakhstan's first
smelter, late last year Trans-World lost control over its investments in
northern Kazakhstan, including the Pavlodar alumina plant that was to
supply the smelter with raw material.... The future of Trans-World and of
this project remains questionable. The current situation is somewhat
confusing." (http://www.enalnewsletter.com/enalnl07.htm)
- Russia
Russia is the world’s largest exporter of primary aluminum, and the second
largest producer (3.15 million tons in 1999) after the United States.
(Mikhailov)
In 1997, according to Euromoney, Trans-World sought to raise funds for
smelter
upgrades in Russia from "multilaterals such as the EBRD… although the bank
has to date kept a distance from the Russian aluminum industries."
In 1994, the EBRD and Scandanavian financial institutions, including
Finland, were "expected" to grant credits toward the overhaul of the
Kandalaksh aluminum plant in northern Russia, although no such deal appears
to have been finalized. The bank also has considered financing the
Novokuznetsk smelter (CIS Economics & Foreign Trade, June 14, 1994;
Euromoney, April 30, 1997)
The U.S. Trade and Development Agency (TDA) has financed studies at two
smelters. It paid $850,000 toward a study by I.S. Consulting on
modernization at the Bratsk smelter, and $500,000 toward an Alumax (now
Alcoa) study of the Volgograd smelter. (U.S. Trade and Development Agency
(TDA) website, http://www.tda.gov/region/nis.html)
In Leningrad Oblast, the U.S. consulting firm Alutec is negotiating with
the government to build a planned aluminum smelter that would draw power
from the Leningrad Nuclear Power Station. The $650 million, 220,000 ton
plant, would be located close to the Gulf of Finland, in easy reach of
Western markets.
"Because of its location and cheap power, the Leningrad Oblast is a very
advantageous spot for aluminum production," Grigori Dvas, Oblast deputy
governor in charge of industry and economic policy, told the St. Petersburg
Times in 2000. "And even if Alutec doesn't go ahead with its project, we
will find other investors." (John Varoli, "Aluminum Interest Considering
Oblast," St. Petersburg Times, Sept. 26, 2000)
Alutec said it would collaborate with unnamed large transnational
producers, and possibly the World Bank, International Finance Corp., and
EBRD, for financing the new smelter.
"How Alutec will find its niche among these giants is not clear, and
certainly a task filled with great risk, if not danger," reported the St.
Petersburg Times. "Indeed, Alutec understands it will have to cultivate the
good will of Russia's oligarchs and aluminum kings -- the likes of Roman
Abramovich and Oleg Deripaski -- if its project is to succeed." (ibid)
- Tajikistan
The Tajikistan government is planning to privatize the plant to meet
conditions set by the International Monetary Fund. The plant imports
alumina from Russia’s Russky Aluminy and ships ingot to Russia. (Bakhtior
Islamov, "Aral Sea Catastrophe: Case for National, Regional and
International Cooperation," Slavic Research Center, 1998; also,
Globalsilicon news at www.globalsilicon.com/english/e12.htm)
In 1997, the EBRD opened talks with corporations interested in taking
shares in the Taduz smelter, according to the Energy and Aluminum
newsletter. (www.enalnewsletter.com/enalnl06.htm)
In 1999, the International Finance Corporation and the government of
Switzerland provided $400,000 toward an international audit of the smelter.
According to the IFC, the assessment "identifies viable privatization
options for the company." ("Tadaz: Production of aluminum must increase to
300,000 tons by 2000, Asia Pulse, June 14, 1999; International Finance
Corp., "Annex: TA Projects Approved for Support by Donors in FY99," in IFC
1999 annual report)
According to Radio Free Europe, Turkey’s EximBank is considering an $8
million loan to the Tursunzade Aluminum Plant. ("Tajikistan, Turkey seek to
expand economic ties," Radio Free Europe/Radio Liberty Newsline, Sept. 27,
2000)
Sayan, now part of Russian Aluminum, has also been interested in investing
in Tadaz. (www.enalnewsletter.com/enalnl07.htm)
In 1999, TDA paid $450,000 toward a Bechtel Corp. feasibility study of a
possible new 165,000 ton, $575 million smelter at Mery, Turkmenistan. (TDA;
Mining Annual Review, March, 2000; WWP-Business Opportunities in Eastern
Europe & the CIS, Dec. 8, 1999)
- Ukraine
In Ukraine, the U.S. TDA paid $500,000 toward a Technalum study of the
Zaporozhye smelter, and $240,900 toward a Kaiser study of the ZALK smelter.
(TDA)
Other intertwining of banks and aluminum
- Argentina
Aluar (Argentina) installed a new 120MW gas-fired power plant as part of a
program to expand its aluminum production capacity from 175,000 to 258,000
tons by 1999. (Aluminium Today, April 1997; Reuters, Dec. 24, 1996)
Existing infrastructure includes a 448MW plant in Fataleufu, southern
Patagonia, and a reserve 54MW thermal plant imported from Italy. During the
smelter’s construction, company officials noted the "great advantage
involved in cheap electric power to be generated by the State," which was
four-tenths of one center per kilowatt in 1975. In 1971, the Argentine
government requested$80 million in credit from the Inter-American
Development Bank to build the $90 million dam. (Latin America Newsletter,
Aug. 20, 1971; May 3, 1974).
- Brazil
The World Bank helped to finance the construction of the massive Tucurui
dam, which fueled the proliferation of aluminum infrastructure in Amazonia.
(See Energy chapter for more details) (Latin American
Newsletters, Nov. 23, 1984)
The Japan Export-Import Bank financed the development of a second set of
transmission lines from the Tucurui hydroelectric dam to the Albras 340,000
tpy smelter at the mouth of the Amazon River, at a cost of $130 million.
Albras is 49% owned by a consortium of Japanese corporations, including
Showa Denko, Kobe Steel, Marubeni and Sumitomo, which import the plant’s
aluminum.
The Tucurui dam also supplies energy to the 350,000 tpy Alumar smelter,
which is 60% owned by Alcoa and 40% by Shell. Tucurui produces 3,000 MW of
power, with 1,400 MW dedicated to supply Albras, Alumar, and the 1.1
million tpy Alunorte alumina refinery. The companies are considering
participation in a $1.8 billion, 900MW
expansion of Tucurui’s capacity to 6,000 MW. Alumar is the largest private
aluminum project. (Gazeta Mercantil Online, October 22, 1996, Nov. 21,
1996; American Metal Market, July 25, 1996; Financial Times, Nov. 16, 1996)
- Cameroon
The 90,000 tpy Soderburg technology-driven Alucam smelter in Cameroon is
majority owned by Pechiney of France. In 1987, the French government aid
agency, Caisse Centrale de Cooperation Economique, loaned Alucam $1.4
million toward the purchase of new equipment. At least three other
multilateral loans have benefitted Pechiney’s Alucam smelter: In 1985, the
European Investment Bank loaned Cameroon $21.2 million, and the government
of Kuwait’s Development fund loaned 3 billion CFA francs for the Song
Loulou power station which helps to power the Alucam smelter and in 1986,
the CCCE
loaned Cameroon $12.2 million for installing two 48MW turbines at the dam.
(African Economic Digest, July 12, 1986; Oct. 30, 1987, Feb. 8, 1986)
In 1979, the International Finance Corp. committed $7.9 million toward
Alucam. Twenty years later, the IFC still held equity of $0.9 million in
the aluminum smelter. (IFC annual report 1999)
- China
International finance has keyed the surge in aluminum production in China,
where aluminum production grew by 9.7 percent from 1998 to 1999, reaching a
record total of 2.6 million tons. Most Chinese smelters are small-scale.
The largest, Guizhou, produced 227,000 tons in 1999. The other four largest
smelters are Qinghai (205,000 tons in 1999), Baotou (117,000), Pingguo
(110,000), and Qingtonxia (102,000). More than 90 other smelters produce
less than 100,000 tons. Expansion projects are planned at Baotou (105,000
ton additional capacity by 2002), Pingguo (200,000 ton possible expansion),
Qingtongxia (100,000 ton expansion planned for 2001), and 12 other
smelters. (Mining Annual Review, March 2000)
IFC and OPIC have been, or may become, involved in a smelter projects in
Heijin City, Guangxi Pingguo, and an electrode paste plant that supplies
Chinese aluminum smelters.
In June 2000, the IFC agreed to invest $14 million in a Soderberg paste
plant, owned by Elkem of Norway, in the northwestern China region of
Ningxia. Elkem bought the shuttered plant from the state in April 2000. The
Elkem Carbon China plant supplies paste and anthracite to the aluminum and
ferroalloy industries. The IFC described this new plant as "the largest
single foreign investment to date in Ningxia." The Norwegian government
financed an environmental assessment of the Elkem project. Even though the
plant produces a paste for an antequated technology (Soderberg smelting),
the IFC called the project "an example for the industry through the use of
modern, efficient, less-polluting technology." (International Finance
Corp., "IFC invests US$14 million to develop China’s Northwestern Region,"
press release, June 7, 2000; "IFC invests US$14 million in western China,"
China Online, at
www.chinaonline.com/industry/chemicals/NewsArchive/Secure/2000/June/B1000613
12.asp))
Alcan (Canada) has reached a memorandum of understanding with the Chinese
government’s China Non-Ferrous Metals Industry Corp. to build a new 240,000
tpy smelter in Heijin City, Shanxi province, with possible expansion to
400,000 tpy. A feasibility study was due to be completed by mid-1999.
(ESP-Business Opportunities in Asia & the Pacific, Jan. 1, 1998) It would
be one of Alcan’s largest smelters and would have a captive coal-fired
power plant. IFC and OPIC involvement is possible. (Aluminium Today, June
1997; China Economic Review, Dec. 1995)
The governments of Denmark, France, Netherlands and Sweden, in 1991,
extended loans totaling $90 million to supply equipment to the new 300,000
tpy Guangxi Pingguo aluminum smelter. According to the Mining Journal (Oct.
4, 1991), the loans funded the importation of alumina refining equipment
from French firms Pechiney, Kestner and KHD ($63 million), power plant
equipment from ABB ($10.5 million), alumina pumping technology from the
Dutch Geho Pump Corp. ($7.7 milion), and an alumina sintering furnace from
F.L. Smidth of Denmark ($4.7 million).
- Egypt:
In 1988, Alcoa considered buying "a substantial stake in Egyptalum," a
180,000 tpy smelter, according to Middle East Economic Digest (July 10,
1998). Egyptalum is planning to boost output by 120,000 tpy, and convert
its existing Soderburg anodes to pre-baked cells. In 1995, the European
Union-funded European Investment Bank loaned $92 million toward
modernization at Egyptalum. (African Economic Digest, Nov. 6, 1996)
- Costa Rica
In 1971, Costa Rica President Jose Figueres signed a pact with Alcoa, the
World Bank, and the Soviet Union "to construct a $400 million alumina
refinery and hydroelectric generating plant in the northwestern province of
Guanacaste. Electrical power from the new dam was to be transmitted to the
Alcoa mining site. In exchange for purchasing Costa Rica's excess coffee,
Soviet hydroelectric generating equipment was to be purchased for the
500,000 kw dam. The combination of public opposition to Soviet involvement
and ALCOA's decision to cease bauxite mining due to poor ore quality caused
the negotiations to fail," according to the National Congress of American
Indians.
"Through the World Council of Indigenous Peoples the Boruca people became
informed about the experience of Indians in Surinam, the aboriginals in
Australia and the Yanomamo of Brazil as they confronted similar bank and
state initiated development projects. It was the discovery that
Multilateral Development Banks, state government economic pressures and
multinational corporations had combined to promote developments in
territories of least political resistance that caused the Boruca people to
increase their resistance to the planned Boruca Dam and the aluminum
processing plant. Indeed, the Boruca people sought to expose the actual
intent of the Multilateral Development Bank, the aluminum industry and the
Costa Rican government to the
national citizens of Costa Rica in an effort to prevent the further
advancement of the project.
"What had been revealed by the Borucas was that the Alcoa aluminum company
was interested in locating its processing facilities in Costa Rica because
of the increased political and military tensions in Surinam. The company
was not particularly interested in using Costa Rican labor, nor was it
interested in Costa Rican bauxite. Furthermore, it was revealed that the
actual beneficiaries of the planned Boruca project would be the
Multilateral Development Banks and private banks which would receive
interest payments on past Costa Rican loans; and the Alcoa company would
benefit from a "safe haven", low or nonexistent taxes and tariffs, low
labor costs and "free zone" ports from which to import and export raw and
processed bauxite and aluminum. And, of course, the aluminum industry would
be assured inexpensive electrical power." (Ralph Eluska, vice president of
the National Congress of American Indians, "Tribal populations and
international banking practices: a fundamental conflict over development
goals," Testimony before the House Banking Committee's Subcommittee on
International Development Institutions and Finance, June 29, 1983 at
www.cwis.org/fwdp/International/bankpoly.txt)
- Ghana
Sixty percent of the bauxite mined by the Ghana Bauxite Co. is exported to
Alcan’s alumina refinery in the U.K. The U.K.’s Commonwealth Development
Corporation loaned the GBC 3.1 million sterling to install a new conveyor,
completed in 1992, to haul load bauxite onto awaiting ships in Takoradi.
(Reuter, Sept. 23, 1994)
Bilateral and multilateral financial institutions have also financed the
development of energy consumed by the aluminum industry in Ghana. The Valco
aluminum smelter (90% owned by Kaiser) draws over about 45% of the power
generated by the Volta
River Authority’s Akosombo and Kpong dams. (Peter Owu, "Energy Crisis in
Ghana," Africtech, vol8, no.1, at African Technology Forum website:
web.mit.edu/afs/athena.mit.edu/activity/a/africantech/www/articles/GhanaCris
is.htm)
In 1961, OPIC and the World Bank financed the construction of the Akosombo
Dam on the Volta River. Valco, then the largest smelter in Africa, was
developed to consume power from Akosombo. This dam, according to the
International Rivers Network, "flooded more land than any other dam in the
world, 8,500 square kilometers, around four percent of the area of Ghana."
(International Rivers Network, "When the Rivers Run Dry - The World Bank,
Dams and the Quest for Reparations," at
www.irn.org/programs/finance/damfacts.html; OPIC, "OPIC in Ghana," March
1999, at www.opic.gov)
The IDA ($100 million), EIB ($45 million), African Development Bank, CDC
(U.K.) , CFD (France) and others have helped to construct a new Aboadse
power project and connections to the national grid. National power
shortages caused by drought and excessive demand forced Valco to curtail
production in the mid-1990s. (Africa Energy & Mining, Jan. 25, 1995, Dec.
21, 1994).
Eight bilateral and multilateral institutions provided over $300 million in
financing toward the development of the new Takorade oil-fired power plant,
built to provide more reliable power. Financing instittuions include the
IDA, EIB, CDC, Kuwait Fund for Arab Economic Development, Arab Bank for
Economic Development in Africa, African Development Bank, and the Caisse
Francaise de Developpement. This plant was seen as necessary to maintain
Valco’s presence in Ghana. (Owu)
OPIC has also provided insurance for Valco. ("OPIC in Ghana")
- Guinea
Numerous aid agencies have directly supported the mining of bauxite and
alumina refining in Guinea.
In 1992, the EIB extended an $18.5 million loan, and the CCCE a $20 million
loan to
financing a modernization project at the Friguia refinery, in which French
firm Pechiney, British Aluminium, Noranda, VAW (Germany), and Alusuisse
have a 51% controlling interest. Previously, the EIB loaned Friguia about
$5 million in 1980, $7 million in 1984, and $15 million in 1988. Also in
1988, the European Development Fund approved a $40 million loan toward
Friguia. (Euromoney Trade Finance Report, Jan. 1992; Africa Energy &
Mining, Feb. 22, 1995; Europe Energy, Nov. 6, 1992; European Report, Nov.
23, 1991; Mining Journal, Dec. 9, 1988; Mining Annual Review, June 1992)
In 1996, the World Bank’s IDA approved a $12.2 million credit toward the
privatization of Guinea’s mining sector. "The project objectives are to
strengthen the Government’s capacity to act as facilitator and regulator of
mining activities, and to attract private investment for mining sector
development," according to the agency. (World Bank Project Information
Document, "Guinea-Mining Sector Investment Promotion Project," PID:
GNPA1077, June 29, 1995)
In October 1997, the World Bank put the "privatization of the alumina firm
Friguia back on track," according to Africa Energy & Mining (Nov. 18, 1998)
The IMF has also played a big role in the restructuring of Guinea’s mining
operations, including bauxite, through a structural adjustment loan. In
1999, the IMF reported that "the government has decided to divest itself of
its mining companies and thus reduce its role as owner and operator in the
sector, while strengthening its role as regulator and intermediary....
Through privatization it is intending also to reduce its shareholding in
the aluminum company, Friguia, to a minority without veto power. Should the
privatization operation not succeed because of the absence of a credible
buyer, the government will resort to a private concession. The government
will continue its restructuring of the bauxite company, SBK, and is
committed to reducing its share of the company's capital to a minority. The
government will continue its efforts in connection with reducing operating
costs and strengthening the management of another bauxite company, CBG, and
will design a strategy for encouraging new private investment in the
bauxite and aluminum sectors in the Boké region which may include a share
in the CBG." (International Monetary Fund, "Guinea Enhanced Structural
Adjustment Facility
Policy Framework Paper, 1999-2001," December 8, 1999)
- Guyana
The U.S. Overseas Private Investment Corp. has insured bauxite mining by
Reynolds (U.S.) in Guyana to the tune of $14.5 million in the 1970s, and
$14 million in 1991. The U.K. CDC has also provided $6.5 million in funding
toward bauxite mining in Guyana. Most of Guyana’s bauxite is shipped to the
U.S. and the E.U.
The World Bank, European Investment Bank ($14 million), and the European
Union provided $20 million toward restructuring Guyana’s bauxite industry
in the early 1990s.
(American Metal Market, Dec., 1991; Chemical Business News Base, May 15,
1991; Inter Press Service, July 19, 1994; Caribbean News Agency, Oct. 19,
1993; Agence Europe, Feb. 20, 1993)
In 1991, the Guyanese government dissolved the state-owned Guymine
operation. Green Mining of the U.S., which strip-mined the Linden bauxite
reserve for Guymine, had held insurance from OPIC in 1989 and 1990, and
requested reimbursement for unpaid work. After Green Mining filed the
claims, OPIC suspended its coverage for U.S. projects in Guyana. On July
28, 2000, Green dropped its claims against OPIC, and its lawsuits against
the Guyana government, in exchange for payment. The settlement reopened
OPIC insurance operations in Guyana. ("OPIC Restores Support for American
Investments in Guyana," Guyana Monthly Update, August 2000; U.S. Embassy in
Guyana, "Investment Climate (Guyana)," 1995 Commercial Guide to Guyana,
U.S. Dept. of Commerce, August 21, 1996)
Guyana’s government is planning to privatize its two bauxite companies,
Berbice Mining Enterprises (Bermine) and Linden Mining Enterprise
(Linmine). The privatization would open 60% majority stakes to help fund
capital improvements at both facilities. (Plunkert, 2000) Reynolds, now
owned by Alcoa, holds a 50% stake in the Bermine operation, and purchased 2
million tons of bauxite from the enterprise in 2000. (Reynolds 10-K,
FY1999)
The IMF has imposed a $70 million structural adjustment program in Guyana
which has targeted nationalized companies. In November 2000, IMF’s
directors "encouraged the authorities to persevere with efforts to
restructure the remaining public enterprises, especially the modernization
of the sugar company, and welcomed their intention to privatize the bauxite
companies." (IMF, "IMF Concludes Article IV Consultation with Guyana,"
Public Information Notice No. 00/102, Nov. 30, 2000)
- India
Italy’s SACE (State Export Credit Guarantee Corp.) and Mediocredito
have financed $15 millionts toward Bharat Aluminium Co. (Balco)’s purchase
of equipment from FATA Group of Italy. The government of Norway funded a
study of Balco by Hydro Aluminum (Nor) in 1989. In 1984, the U.K. Export
Credit Guarantee Department guaranteed a 25 million pound loan toward the
purchase of four power generators by Balco. The four 67.5 MW units were
provided by GEC of the U.K. (Business Line, August 5, 1998; Mining Journal,
Feb. 17, 1989; Financial Times, July 31,
1984)
The export-oriented NALCO aluminum complex in Talcher-Angul, Orissa, was
built using Pechiney (France) technology, with financing from the French
government (1.05 billion francs). (Aluminium Today, May 1993). The U.S.
Trade and Development Agency recently granted Indalco funds to study the
doubling of production at its Hirakud, Orissa, aluminum plant. Kaiser will
conduct the study and "supply technology for the project,"
according to International Market Insights (March 30, 1998).
In 1995, the IFC approved $25 million in financing toward a coke and power
plant in Andhra Pradesh. The Rain Calcining coke plant in Visakhapatnam,
partially owned by U.S. transnationals Houston Industries Energy and
Applied Industrial Materials Corp., produces 250,000 tons of calcined
petroleum coke for the aluminum industry in India and elsewhere in Asia.
(IFC Annual Report FY1995; The Hindu (India), Feb. 25, 1997, Deutsche
Press-Agentur, Aug. 28, 1995; Ogrin Universal News Services Ltd., Aug. 28,
1995)
- Middle East
According to a Nov. 2000 report by Gulf Business Online, "both Bahrain and
the UAE (United Arab Emirates) have been proactive in encouraging more
downstream industries as a means of adding more value to their latent
industrial sector. The Bahrain Development Bank (BDB), Bahrain's Ministry
of Finance and National Economy, the Ministry of Oil and Industry and the
United Nations Industrial Development Organisation (UNIDO), have joined
hands to promote the budding aluminium industry in the Gulf region by
drafting product and financing strategy. A string of projects with joint
ventures and some buy-back arrangements are now in the pipeline." (Roger
Jacobson, "Future looks bright for the GCC aluminium industrry," Gulf
Business Online (Dubai), Nov. 9, 2000)
- Indonesia
In one of the most infamous boondoggles of bilateral aid, the Japanese
government loaned billions of dollars [CHECK] toward the development of the
225,000 ton Inalum smelter in North Sumatra, Indonesia. The Inalum smelter
is controlled by Nippon Asahan Aluminium Co., a consortium of 12 Japanese
companies (including Hitachi, Toshiba, and Mitsubishi) and the government’s
Overseas Cooperation Fund.
In 1992, the Los Angeles Times reported that ), "critics of the Asahan
project say it is a classic example of the kind of commercially oriented
foreign aid that serves the strategic interests of Japan, the donor, far
more than the recipients of official assistance. A potent symbol of skewed
priorities… is the nine-hole golf course carved out of the jungle in
Paritohan, built with aid money for Inalum employees and used most
enthusiastically by Japanese visitors and expatriate engineers. Profitable
or not at this end, Inalum provides a cheap and secure supply of aluminum
to the cartel of Japanese aluminum makers who invested in a majority stake
of the project, using low-interest Tokyo government financing.
"[A] pattern has emerged, analysts say: The bulk of the aid [to Asia] has
gone into large infrastructure projects that provide lucrative contracts
for Japanese construction firms and equipment supplier," the report added.
(Los Angeles Times, June 9, 1992)
See energy section for more details on this project.
- Oman
In May 1998, the Omani government signed a $250 million loan from the
Import-Export Bank of Japan to build a new port which will serve
petrochemical plants and an aluminum smelter planned in Sohar, according to
Agence France Presse (June 1, 1998) Dubal is pondering the construction of
a new $2.5 billion, 480,000 ton smelter in Oman. (Rasha Owais, "Dubal
studies Oman smelter project," Gulf News, April 10, 1999)
- Mozambique and Malawi
In the industry’s largest recent multilateral and bilateral bank financing
scheme, foreign institutions including the World Bank, European Investment
Bank, and national agencies have poured over $820 million into the new
Billiton/Mitsubishi smelter in Mozambique.
The smelter development is the largest-ever private investment project in
the country. Its projected cost of $1.3 billion almost equal’s Mozambique’s
Gross National Product. (Leon Pretorius, "Regional integration and
development in Southern Africa: A case study of the MOZAL Project and its
implications for workers," International Labour Resource and Information
Group, March 2000)
The Mozal consortium -- Billiton (47%), Mitsubishi (25%), South Africa’s
Industrial Development Corp. (24%), and the government of Mozambique (4%)
-- completed the 250,000 ton per year smelter in 2000. About $820 million
of the $1.34 billion in project costs are being financed by the foreign
multilateral and bilateral agencies, including World Bank’s IFC ($120
million in loans) and IDA, the European Investment Bank ($46 million), and
national agencies in the U.K. (Commonwealth Development Corp.), Germany
(DEG) , South Africa (Credit Guarantee Insurance Corp.), and France ($26
million from the Caisse Francaise de Developpement). (American Metal
Market, May 19, 1998; Mozal press release, "International Financing for
Mozal smelter concluded," Oct. 30, 1998, at www.mozal.com; International
Finance Corp., "Mozambique: Mozal Aluminum Company," at www.ifc.org;
European Investment Bank, "EIB financing for regional power project in
Southern Africa," press release, June 29, 1999)
The consortium is conducting a feasibility study for the possible doubling
of Mozal’s capacity. (Stephen Johnston, "Aluminium," Mining Annual Review,
March 2000)
The possible gutting of Mulanje Mountain in Malawi to supply bauxite for
Mozal also has multilateral bank ties. In the mid-1990s, a study financed
by the African Development Bank has uncovered the reserves at Mulanje. The
study, according to African Economic Digest (June 10, 1996) study indicated
that the project could produce 540,000 tons of bauxite a year… 200,000 tons
of alumina and 100,000 tons of aluminum. About $880 million is needed to
develop the project." (African Economic Digest, June 10, 1996).
(See Environment chapter for more details on Mulanje Mountain, the Human
Rights chapter for more on the worker rights at Mozal, and the Energy
chapter for more on the impact of Mozal’s energy consumption on the Zambezi
River delta)
- Venezuela
The IMF is encouraging the Venezuelan government to privatize its aluminum
industry. In 1998, IMF managing director Michel Camdessus met with
Venezualan officials and pushed "the privatization of companies in the
aluminum and electricity sector," according to an IMF release. (IMF news
brief No. 98/13, May 19, 1998)
- Vietnam
The Vietnamese government is seeking support from France’s Overseas
Development Agency to devleop a bauxite mine/refinery/smelter operation in
the Tan Rai District of Lam Dong Province. The government hopes to have the
complex producing one million tons of bauxite and 200,000 tons of aluminum
per year by 2003. The complex would be owned by a joint venture of the
government and Pechiney. ("Bauxite Joint Venture Approved," Dau Tu, April
22, 1999, www.mekongresearch.com/May1999energy.htm)
Pechiney is expected to complete a feasibility study on the $800 million
project in 2001. The Central Highlands (Taây Nguyeân) region of Vietnam
holds reserves of over 3.4 billion tons of bauxite. ("Industry Ministry has
seen the future, and it’s made of aluminium," Vietnam News Agency, March
22, 2000 at vietnamnews.vnagency.com.vn/2000-03/21/Stories/14.htm;
www.vneconomy.com.vn/en/ext_economic/bilateral/fra001.htm)
VI. Human rights
Focus:
Aluminum industrialization and repression in India's state of Orissa
(footnote: This updates part of a chapter in an Institute of Policy Studies
1998 report, "The World Bank's Juggernaut: The Coal-Fired Industrial
Colonization of India's State of Orissa.)
The Indian state of Orissa's vast bauxite reserves are among the world's
largest. More bauxite is mined here than in all but seven countries. The
state holds about 10 percent of global bauxite reserves. Coal and hydro
power provide cheap sources for existing and proposed smelters. Labor is
also inexpensive; thus, foreign corporations have rushed to proliferate
bauxite mining, alumina refining, and aluminum smelting in India.
("Canadian ambition for Indian bauxite," Mining Journal, March 12, 1999)
In the name of the "upliftment of backwards tribes" -- or perhaps just
corporate profits -- Orissa has entered the list of transnational
corporations' favorite sources of bauxite and alumina. In short time, the
aluminum industry's blasting, refining, smelting, and coal-fired power
operations already have created a legacy of forced removals of people from
their villages, ruined temples, destroyed forests, poisoned rivers, brittle
bones, and dirty air.
Orissa's early experiences with this industry have compelled many people to
campaign for a halt to bauxite mining and smelting. Protests have
surrounded the NALCO aluminum smelter in Angul, the Utkal bauxite/alumina
project, and several other new or planned bauxite mines and alumina
smelters.
Corporate investors and the state and national governments have ignored or
squashed the dissident voices. As Ranjit Dev Raj of Inter Press Service
reported in 1999, "Mining transnationals have found an easy way to grab
bauxite-laden land from 'adivasis' (aboriginals) in the mineral-rich state
of Orissa, eastern India - get them arrested on trumped up criminal
charges." (Ranjit Dev Raj, "Bauxite TNCs Grab Tribal Land With Impunity,"
Inter Press Service, June 2, 1999)
Orissa's cheap labor, energy, and land have provided companies like Alcan,
Pechiney, Alcoa, and Alusuisse with the potential to build the lowest-cost
bauxite mining and alumina refining operations in the world. This
export-oriented industry is heavily subsidized by the Indian government,
which is eager to move big industries into regions it has labeled as
"backward areas." India offers 100% export-oriented industries exemption
from paying income taxes. It also drops import tariffs for equipment used
in these plants.
Companies utilizing these loopholes defend them as a means to uplift the
poor. In 1993, for example, Alutec of the U.S. defended a proposed bauxite
mine and alumina refinery venture in a 1993 study. "The state of Orissa and
the Indian Government have a commitment to develop the backward districts
of Kalahandi and the adjoining regions. A project of this type will lead to
infrastructure development, creation of modern townships, schools, medical
facilities and direct employment to approximately 1,000 persons." (Alutec
Inc., "RPGE Alumina Refinery Project, State of Orissa: Desk Study for
United States Trade and Development Agency," September 1993.)
But these same plants are tearing at the social fabric of life in many
parts of Orissa, according to the growing number of people campaigning
against them. Opponents of the new mines, refineries and smelters are
trying to protect their history and their communities in order to secure
their future. They argue that while the industry is there, riches may flow
to some people in the region, but when the bauxite deposits are gone, the
modern townships, schools and hospitals will almost certainly disappear
with them. Only a legacy of environmental and social destruction will
remain.
According to Inter Press Service, "Far from protecting the 'adivasis' and
their land, as it is constitutionally and legally bound to do, the Orissa
state government has openly pitched in on behalf of the TNCs which see no
need to negotiate with the 'adivasis'." (IPS, June 2, 1999)
''So far we have only received threats from policemen, district officials
and goons hired by the companies,'' Bidu Lata Huika, convenor of the
Orissa Adivasi Manch (Orissa Aboriginals Forum) said in 1999. "'These
companies hire goons to demolish our homes and attack us and then file
criminal cases on the basis of which the police arrest us. In any case we
are not interested in the compensation offered by the bauxite companies -
we want to continue as farmers on this land which has sustained us for
centuries." (ibid)
One bauxite mining/alumina refining scheme, Utkal Alumina, has drawn
increasing fire from indigenous people and others in Orissa's Raigada
district. Hydro of Norway and Alcan of Canada hold 45 and 35 percent
shares in the project, respectively. Indian Aluminium Co. holds the
balance. Alcan owned a 55% stake in Indal at the end of 1999. The companies
plan to complete financing by the end of 2001 and start producing one
million tons per year of alumina by 2005. (Plunkert, 2000; Alcan 10-K,
FY1999) ]
The Utkal consortium asserted in 1995 that it is "totally committed towards
the socio-economic upliftment of a backward tribal area." Utkal opponents
claim that 3,500 people will lose their land. Hydro of Norway said that 500
to 700 people would have to move from 2,400 acres of land. ("Hydro of
Norway has problems with alumina plant," Dagens Naeringsliv, March 28,
1996)
Local peoples' efforts to halt the Utkal project date almost to its
inception in 1991. Their protests have intensified in recent years. In
August 1997, according to Norwegian NGO NorWatch, Kucheipadar villagers
"smashed a prototype house that Utkal had erected in the neighborhood to
show the people who will be forced to relocate what kind of houses they
would be offered." All of the villagers' cultivated land would be wiped out
by the Utkal development. (Morten Rønning, "The fight against Utkal is
coming to a head," NorWatch newsletter, No. 4, Feb. 1998)
NorWatch interviewed some of the people who were in the blockade. Lochma
Mahji, a 42 year old woman, told the NGO that after four days of blocking
the road, many of the villagers "went back to work on our fields, and the
village was almost empty. At four a.m. on January 5, the few of us who were
left in the village were told that a truck and four jeeps were on their
way, and that the police were removing the roadblock. I immediately went
there, and stood in front of it. Representatives of the local authorities
and the police were there. We asked, 'Why are you removing the roadblock?
If you remove it, we'll lose our land and our homes. The authority you have
doesn't come from the womb of our motherland. You have your authority from
us, and you're obliged to help us.'"
The police responded with violence, she said. "The police grabbed the other
women present by their hands and threw them down on the ground. I objected,
saying that one cannot take a woman's hand unless one is married to her.
The police used the butts of their rifles to push me back. I said, 'Are you
going to shoot me - are you going to kill me? I'm not scared. I stand for
what I fight for, and I'm willing to die for that.' The police gathered
around me and hit me three times on my legs with sticks. I collapsed and
fainted. At the same time the police attacked the others, and threw
tear-gas grenades. Seven police officers came over to me, tried to lift me
up, and said they wanted to help me get home...
They stabbed me with iron pipes to get me up. A police officer pulled at my
leg. I tried to stand up, and felt an excruciating pain in my legs when I
stretched them out. I kicked the police officer who held my leg in his
face. When I managed to get up, two police officers grabbed my hair and
pulled me over to the roadblock. I was dragged there practically on my
knees."
Mahji said 17 women, 6 children and 7 or 8 men were injured in the police
action. Afterwards, the villagers sent a notice to the chief of police.
"He immediately tore it apart, and said that if we stirred up more trouble,
they would kill us," she said.
A boy told NorWatch that at the blockade, "I was beaten by the police once.
I asked why they hit me, but they didn't answer. The roadblock is there
only to control representatives of the authorities and the company. It's
our land; that's why we put it up. We cut trees, carry rocks and stand
guard at the roadblock." (Rønning)
Krushna Saunta, an aboriginal landowner and social worker, said in 1999
that, ''I was held in jail for a week along with five others, beaten, and
then released on bail. Everybody in my village of Kucheipadar have been
arrested at one time or another." Saunta's Organization for Protection of
Nature's Wealth (Sampada Sangrakshan Parishad or PSSP) conducted a poll of
local villagers in November 1998. He said 96 percent people in the district
opposed the projects. (IPS, June 2, 1999)
A five-person team of members of the Council for Social Development visited
the region in 1999. ''We were told by officials at the highest level in
Bhubaneshwar, Orissa's capital that the government would not countenance
any opposition to Raigada's industrialization," said team member, D.
Bandhyopadhyay. According to IPS, the team members were told that the
government was determined to 'teach a lesson' to NGOs which they accused of
inciting and organizing tribals against land acquisition for the 'public
good.'" (IPS, June 2, 1999)
Four NGOs in the area have been threatened with bans against receiving
government funds. A member of one of those NGOs, Vidhya Das of Agragamee,
said "This is just colonialism in another garb but the people here are not
going to give up so easily - they have learnt from the mistakes of their
brethren. Mines and factories have reduced self-reliant, self respecting
aboriginal families to live like refugees in ill- planned rehabilitation
colonies - but most of them are still homeless." (IPS, June 2, 1999)
In June 1998, Agragamee and people from Kucheipadar set up another road
block. According to NorWatch, around 3 a.m. on June 16, 1998, "armed police
raided one of Agragamee's local offices, and an hour later they raided the
organization's main office. The operation has been described as very rough,
and some of the employees were beaten. Eight staff members were arrested,
and five of them were imprisoned for several days before they were released
on bail. The charges, which Agragamee strongly rejects, were use of
violence, rebellious behavior, and suspicion of incitement to riot against
the mining companies." (Tarjei Leer-Salvesen, "Armed police clears the way
for Utkal, NorWatch newsletter No. 14, July 1998)
The troubled Utkal project has drawn the attention of many in Norway, home
to the consortium's lead corporation, Norsk Hydro. In January 2000,
Minister of Foreign Affairs Knut Vollebæk met with Norsk Hydro and three
NGO representatives in Delhi to discuss the project. According to Norwegian
NGO NorWatch, during the meeting Norsk Hydro "allegedly admitted that the
dialogue with the affected local population is not as good as it should be,
and then claimed that the local population supports them. When they were
confronted with the fact that the company is taking some of the local
population to court, one of the company's representatives replied that
Norsk Hydro does not deal with violent groups." (Tarjei Leer-Salvesen,
"Utkal Alumina discussed at top political level," NorWatch newsletter, No.
2, 2000)
Conflict over the Utkal project continued in 2000. On February 13, more
than 5,000 people organized by the PSSP demonstrated outside the
consortium's office in Tikiri. They demanded the end of the project,
Utkal's aid program, and police harassment. The demonstrators also demanded
the return of land acquired by Utkal to rightful owners. (NorWatch
newsletter, No. 2, 2000)
In April, according to the Norwegian paper, Dagens Naeringsliv, "Two
thousand demonstrators armed with bamboo canes and bows and arrows
destroyed two wooden bridges and trampled down 50,000 cuttings that were
part of a forest planting project. The next day armed police made arrests.
On April 22, protesters built a barricade to stop contract workers from
traveling to the site of the proposed bauxite mine." ("More conflict over
Norsk Hydro's Utkal project," Dagens Naeringsliv, as reported by Chemical
Business Newsbase, June 19, 2000)
The struggle took an even more violent turn in December.
On Dec. 7, Hydro issued a press release asserting that "most of the
inhabitants in Utkal are in favor of the bauxite and alumina project.
Having adopted an attitude of wait-and-see for several years, the political
parties in the area have now gathered support for the project. It quoted
K.C. Mohapatra, leader of the All Parties Committee, as saying "We welcome
the project and are united in our support." (www.hydro.com)
This propaganda washed away in a bloodbath nine days later. On Dec. 16,
police shot and killed three local villagers in the town of Kaikanch, where
people have refused to move out for Utkal. Political leaders of the CPI
[ck] demanded a judicial inquiry into the incident. According to The Hindu,
politicians "said the killings of the tribals was a pre-planned one to
terrorize them to give into their demands and vacate their village for
enabling them to set up the project."
Hydro issued a press release two days later. "Three people were killed on
Dec. 16 when police opened fire on an aggressive crowd in the village of
Maikanch... Hydro profoundly regrets the incident, emphasizes Hydro
Aluminum information manager Thomas Knutzen." Knutsen said, "No
representatives from Hydro or Utkal Alumina were in the vicinity when the
incident occurred. Therefore we don't know any details."
Biswanath Sahoo, a party representative who visited the village after the
killings, said two platoons of police entered the village and brutally
attacked a woman. He said that men who heard the woman's cry were fired at
as they neared. Police shot and killed three of the men. They also shot
four cattle grazing nearby. ("Probe into Rayagada incident sought," The
Hindu, Dec. 22, 2000)
[Box]
A 16 year old boy from Kucheipadar has written songs about the Utkal
struggle. Here is one of them:
Wind! wind, Oh company wind,
People! flowing in whole of Orissa.
Come fight for our rights, Come, let us struggle.
We are struggling, we are struggling.
Come, we have to release our mother land,
Come my mother and sister, become a unity.
Come forward without fear.
We should not leave our motherland in the hands of the company,
In the hands of the companies.
Come together for struggle.
Don't watch and keep quiet, my struggling group.
Danger coming toward us, to give us tragedy and sorrow.
Send back this foreign company;
We may die without fearing the company,
Look my friends, to the company and to the government,
Coming toward us to destroy and demolish us.
We don't need Tata, Hydro, Indal.
We don't need, we don't need.
We fight for our land,
We may die, have no fear, come forward.
By liquor the company has tied our mouths,
With created fears, booked cases, and gun point money distributing;
Taking our land illegally,
Land alienation, land alienation.
Hey company and government!
We are aware;
Don't try anymore to cheat us.
Hear, hear, in our own village we are the government.
In our village we will judge;
Our land, our water cannot be traded,
The earth is ours, the earth is ours.
Come, come mother and sister,
Become unity, roar our united voice.
Send back to Indal, Tata, Hydro.
To save Orissa, save Adivasi and Dalit.
The earth is ours, it is our right.
(Source: "Folk songs against the Utkal project," NorWatch newsletter No. 4,
Feb. 1998)
While Utkal is the most prominent bauxite/alumina development, it is not
the only one in Orissa. NALCO plans to operate the world's third largest
alumina refinery in Damanjodi. In the Gadhamardan hills near the Hirakud
reservoir, Bharat Aluminium Cmpany (BALCO) tried to start mining bauxite in
the late 1980s. After blasting at BALCO's mines badly damaged the famous
Nrusinghanath Temple, people in the region had seen enough, and forced a
halt to the project.
Forced relocations and indigenous rights in other countries
The struggle in Orissa echoes similar contests between aluminum
transnationals and indigenous peoples around the world.
Australia
Bauxite mining in the Australian province of Queensland occurs on native
land. In Dec. 1996, the Australian high court ruled that Wik and Thayorre
aborigines hold legal Native Title claims on land that Comalco mines in the
town of Weipa. Billiton's bauxite mines in Gove are also on Aboriginal
land. (Suganthi Singarayar, "For Aborigines, Racial Discrimination Act is
Sacred," Inter Press Service, Jan. 27, 1997; Dr. Richard Howitt,
"Exploration, Mining and Indigenous Futures: What does it mean? Why does it
matter?," Macquarie University School of Earth Sciences, 1990)
Next to the Weipa mine, Alcan hopes to develop the Ely bauxite deposit. The
company holds a mining lease dating from 1965. In 1997, it was negotiating
with the local Aboriginal community to obtain access to land where it wants
to build a port. Australian Institute of Aboriginal and Torres Strait
Islander Studies, Native Title Research Unit archives)
Roger Moody called Weipa a "region flagrantly robbed by Comalco from its
Aboriginal inhabitants in the '60s, and which continues to be one of the
major disgraces of northern Queensland...No less controversial is
Pechiney's acquisition in 1981 - along with Billiton Aluminium - of a 40%
interest in the Arukun bauxite prospect in the same area, an aboriginal
reserve whose occupants are firmly against bauxite mining ." (Roger Moody,
"Gulliver PUK (Pechiney-Ugine-Kuhlmann) Dossier" in The Gulliver File -
Mines, people and land: a global battleground, Minewatch, 1992.)
In the 1980s, Alcoa's planned to build a $1.5 billion smelter in Portland,
Victoria, Austria. According to Moody, "the site is part of the
traditional land of the Aboriginal Gunditj-Mara people, who strenuously
fought - using court claims, direct action, occupations and sabotage of
Alcoa's machinery - to stop the smelter being built. Under such pressure
and because of the high electricity price charged by the Victorian state
government, the project was mothballed in 1982. The Labour government in
the state - despite token gestures towards Aboriginal land rights - revived
the project soon after coming to power in 1983, and will in fact take a 25%
stake in it." (ibid).
Brazil
In Brazil, the construction of Tucurui dam displaced more than 25,000
people. More than half of the power generated by the dam goes to aluminum
smelters in northern Brazil. According to the World Commission on Dams,
"subsistence farmers, fisherfolk, pastoralists, and riverbank cultivators"
all had to move out of the way for the new reservoir. In addition, 100,000
people were "affected by reduced water quality, loss of riverbed
cultivation, and decreased downstream fish populations."
"In the case of Tucurui, of the indigenous groups displaced only the
Parakana people were resettled; the other indigenous group that lost land
to the dam was not considered for resettlement benefits," reported the WCD.
The erection of transmission lines also impacts indigenous communities.
According to the WCD, "the Gavaio de Montanha indigenous people, whose
lands were affected by the transmission lines in the Tucurui project, were
initially not considered eligible for compensation but were later given
cash compensation."
After the reservoir was filled in 1984, the WCD reported, "an unusual
proliferation of Mansonia mosquitoes in rural areas close to the reservoir
forced farm families to leave their homes." Another post-construction
impact was the concentration of mercury from gold mining activities
upstream. Fish caught in the reservoir had more than double the maximum
safety level. (World Commission on Dams, "The Report of the World
Commission on Dams; Dams and Development: A New Framework for
Decision-Making," 2000, p. 106, 107, 119, 124)
Guinea
According to NorWatch, the Friguia bauxite and alumina project in Guinea
"has forcibly moved several villages, but the number of affected people is
unknown. It has been impossible to have details on how much is paid as
compensation when someone is forcibly moved, or how this has been carried
out. In the future even more people will have to move as the mine is being
extended. 16-18,000 people are still living within the concession area. The
local population complains of their cattle being run down by the company's
cars, and dying from eating remainders of explosive charges which originate
from the mining. They are not paid any compensation." (Tarjei Leer-Salvesen
and Morten Rønning, "Profits on arms, forced relocation, and environmental
scandals," NorWatch newsletter, June 1998).
Friguia's failure to compensate local villagers was reiterated in a local
newspaper report in 1998. According to Africa Energy and Mining, the
newspaper reported that Friguia managers "have been accused of dubious
financial dealings involving over-billing in favor of its suppliers. The
Conakry-based newspaper L'Independant cited a garage, security companies
and real estate owners in connection with the over-billing. It also said
the company had failed to pay village dwellers compensation for having to
re-locate, even
though it claimed to have sent the money to the local authorities." ("Four
pre-qualified for Friguia," Africa Energy & Mining, Dec. 2, 1998)
Malawi
**** DAPHNE -- This is actually more appropriate in the environment
chapter, within the bauxite section *****
In August 2000, the governments and Malawi and Mozambique discussed a plan
to mine bauxite from Mulanje Mountain, refine it, and ship alumina to
Billiton's Mozal smelter in Mozambique.
Malawi Vice President Justin Malewezi touted the deal. "This will be of
great benefit to both countries since Mozambique will cut expenses of
importing alumina from Australia while Malawi will benefit from job
creation." ("Talks on bauxite venture," ANN/IRIN, August 29, 2000)
A local conglomerate, Press Corporation Ltd., is seeking international
partners to build and operate the mine. In Sept. 2000, Malawi president Dr.
Bakili Muluzi said his government would send a delegation to the United
Kingdom to discuss a possible collaboration on mining the bauxite.
("President Muluzi promises to sack corrupt ministers," MBC radio, Sept.
23, 2000; "Outlet hope for bauxite," Africa Energy & Mining, Oct. 11, 2000)
The government estimates that the mountain holds over 50 million tons of
bauxite. Charles Kaphwiyo, Malawi's geological survey director, said the
bauxite would be dug out from a depth of 14 to 16 meters, and sent down the
mountain by rope and buckets. He estimated that "less than one-tenth" of
the mountain would be mined. ("Environmentalists Concerned Over Bauxite
Project," Africa News, Nov. 26, 2000)
"We have huge untapped mineral resources in Mulanje while our neighbor
(Mozal) is importing alumina from far away like Australia," said Leonard
Kalindekafe, mining director of the Ministry of Natural Resources. "This
is an opportunity the country cannot afford to lose."..(Brian Ligomeka,
"Malawi Mines Peak For Mozambique Factory," Africa News, Nov. 17, 2000)
Others, though, hold a different view. "While many people are just pegging
their thoughts on the economic aspect of mining bauxite on Mulanje,
consideration should be given to the devastation that the project would
have on natural resources and the people who live around the mountain,"
said Jones Njala, head of the Mulanje Mountain Conservation Trust, in Nov.
2000. (Africa News, Nov. 17, 2000)
Mulanje Mountain rises 3,000 meters above sea level and is the highest peak
in Centarl Africa. It spawns nine rivers upon which over 2 million people
depend. In 2000, UNESCO designated Mulanje Mountain as a biosphere reserve.
("Four new biosphere reserves designated in Africa," Africa News, Nov. 9,
2000; Africa News, Nov. 17, 2000)
Wildlife Society of Malawi director Daulosi Mauambeta said pollution from
the operation could impact water resources, small-scale farms, and tea
estates around the mountain. (Africa News, Nov. 26, 2000)
"The benefits in the form of job creation and the general creation of
wealth
from the mine are greater, so the mine will go ahead," said President
Muluzi. ("Malawi's Proposed Bauxite Mine Scales Environmental Hurdle,"
Africa News, Nov. 22, 2000)
Malaysia
For the time being, the Malaysian government has shelved a plan to build a
new 2,400 megawatt dam in Bakun, Sarawak. The dam would have fueled a
planned aluminum smelter and steel mill.
The Bakun dam, according to the head of the Coalition of Concerned NGOs,
could force the resettlement of 10,000 indigenous peoples.
"Why do we want toxic and energy-hungry industries such as Aluminium
smelters?," asked Dr. Kua Kia Soong, head of the coalition. "The earliest
justification for the Bakun dam during the Eighties was the need for energy
to fuel an Aluminium smelter in Bintulu. Aluminium smelting is one industry
that the developed countries want to dump on suckers like us because it is
environmentally toxic and it consumes voracious amounts of energy."
(Dr. Kua Kia Soong, Coalition of Concerned NGOs, press statement, June 10,
1996)
Sierra Leone
In 1995, civil war forced the closure of the Sieromco bauxite mine (owned
by Alcan subsidiary Alusuisse) in Sierra Leone. (Richard Carver, "Sierra
Leone after the ECOMOG intervention," Feb. 1997-April 1998, Writenet, April
1998)
"The tragedy unfolding in Sierra Leone may have its roots - literally -
embedded in a treasure trove of valuable underground minerals," wrote Kathy
Close in May 2000. The country hosts considerable natural resources,
including iron ore, gold, diamonds, and bauxite. (Kathy Close, "The Tragic
Treasure of Sierra Leone," May 23, 2000, on
http://www.oasistv.com/news/5-23-00-story-1.asp)
Suriname
A joint plan by Alcoa and Billiton to develop bauxite reserves in western
Suriname has raised fears among the indigenous community.
Alcoa and Billiton have mined bauxite in eastern Suriname for more than 50
years. Time and again, indigenous villages have vanished to make way for
bauxite mining. "The Government must help us if it is to respect our human
rights as defined by international human rights treaties," pleaded
villagers in one community surrounded by a new Alcoa operation.
Alcoa also operates an aluminum smelter in Suriname. The construction of a
dam to power the smelter flooded tropical rainforest and forced 6,000
people to move.
Now the companies want to mine one of the world's largest bauxite reserves,
the Bakhuis deposit, in western Suriname. In 1998, the Forest Peoples
Programme reported on the track record and possible future impacts of Alcoa
and Billiton.
The FPP raised and relayed fears of the impact of the new mining operation
in western Surinam. "Although the Indigenous population (Carib and Arawak)
of this area is sparse, mining operations will undoubtedly affect them and
will require clearing of vast areas of pristine tropical rainforest...
"Bauxite mining operations," added the FPP, "have historically taken place
with little or no regard for the rights and well-being of Indigenous
peoples and Maroons and the environment. In 1963-63, Alcoa constructed the
Afobaka dam to provide power for a smelter at Paranam. This dam inundated
some 600 square miles of tropical forest and forced the relocation of
approximately 6000 Saramacca and Aucaner Maroons from their ancestral
territories. These territories had been ceded to the Maroons in treaties
concluded with the Dutch colonial administration in the 18th and 19th
centuries. The communities were moved to so-called 'transmigration
villages,' where most remain today. These communities lack basic
facilities, including electricity, even though the power lines to Alcoa's
smelter run nearby. The communities were paid the equivalent of US$3 in
compensation and were not provided with secure land rights in their new
areas....
"Maroon communities near Moengo in east Suriname, like Adjoemakondre, have
also experienced serious problems caused by bauxite mining operations.
These communities have never been compensated for the loss of their lands
and livelihoods and for severe environmental degradation caused by
Suralco's activities.
"These once forested communities now live in a moonscape, surrounded by
blasted rock, covered in dust and debris from blasting and are subjected to
high intensity lights that allow mining to take place 24 hours a day, seven
days a week.
"Adjoemakondre is an extreme example of the impact of Suralco's activities.
It is presently surrounded by three active concessions and mining is taking
place less than 200 meters from the village itself. Much of the community's
agricultural and hunting lands, and in some cases houses, have been
destroyed and the river that runs through the village has turned
brown-orange due to run off from the mining areas. Community members also
allege that their health has suffered as a consequence of environmental
contamination caused by Suralco's activities.
"Suralco commenced operations near Adjoemakondre in 1991 and shortly
thereafter informed the community that they would be relocated as Suralco
wanted to mine under the village. The community objected and sought help
from the government. Negotiations between Suralco and the government
ensued, resulting in an agreement to relocate the village. The community
was not accorded a meaningful role in the negotiations. They did, however,
accept relocation at this point as they saw it as inevitable. Suralco
identified a site, which had already been mined out near the village, and
bulldozed it flat to build a new village. At this point, Suralco changed
its mind and, pointing to its contract with the government, stated that the
government alone was solely responsible for ensuring the welfare of local
communities. The government took no action and relocation did not take
place. Seven years and numerous requests to the government and Suralco
later, the community's position has worsened." ("Maroon Community Petitions
Suriname Government about the Operations of a US-owned Bauxite Mining
Company," Forest Peoples Programme, September 17, 1998)
Villagers from Adjoemakondre petitioned the Surinam government in 1998 to
give them "respect for our rights, especially our land rights that are not
presently recognized by the state of Suriname and are affected by the
mining activities of NV Suralco, a foreign-owned company. This company has
destroyed our environment and our ability to feed our families. We also
seek compensation for the expropriation of our property and interference
with our rights to hunt, fish and farm on our ancestral lands. The
preceding, which was authorized by the Government of Suriname, was caused
by the operations of Suralco. These operations are on-going and remain a
threat to our existence and well-being. To ensure that violations of our
rights cease immediately, we request in the strongest possible terms, that
the government of Suriname take prompt and decisive action to investigate
and remedy these violations of our rights.
"The village was established by our ancestors over 200 years ago... Suralco
arrived in our territory in 1991 and began mining operations in the
immediate surroundings of our village. At that time, we protested against
this and requested that the Government intervened to find a solution. The
Government and Suralco then entered into negotiations, which resulted in
Suralco promising to relocate the village and provide adequate housing and
other facilities for us. Suralco did not honor this promise, stating that
their activities were authorized by the Government when it gave them
concessions and that it was the Government's responsibility to relocate and
provide for the village. Since that time, negotiations have ceased and we
are left with a worse situation than we had in 1991." (Wilma Prika,
Captain, Adjoemakondre, Petition to the Suriname Government Concerning the
Situation in Adjoemakondre, 1998)
Tajikistan
The aluminum smelter in Tursunzade has been a focal point of civil war
combatants. In 1997, up to 25 casualties were reported in a battle between
two army units "apparently over control of the aluminum plant there,"
according to the United Nations. ("Report of the Secretary-General on the
Situation in Tajikistan," United Nations, S/1997/415, May 30, 1997)
United States
Alcoa digs lignite reserves in the central Texas counties of Bastrop and
Lee. This lignite, a kind of coal, fuels an Alcoa smelter in Rockdale,
Texas. County residents are fighting the company's plans to expand
strip-mining to 15,000 acres of land owned by San Antonio's City Public
Service. In the deal, Alcoa would pump aquifer water that would be
extracted as part of the mining operations. (Peggy Fikac, article in
Express-News, Oct. 19, 1999)
Local residents formed the organization Neighbors to Neighbors to fight
resettlement and water depletion that could result from the pact.
According to Bastrop County resident David Houghtling, the Alcoa/San
Antonio "water deal will affect scores of families in Bastrop and Lee
counties. Some of this property has been in families for generations. It
appears that Alcoa intends to use the condemnation powers of San Antonio to
push people off their property."
He said that Alcoa officials in 1999 contacted "an 85-year-old widowed
family member of mine and told her that she would have to sell her land and
house to them. When she asked what Alcoa was going to do with her house,
she was told that they were going to tear it down. This home has afforded
her a sense of independence and freedom in her later years and Alcoa has no
legal right to condemn property. They have made similar threats to other
neighbors." (Statement by David Houghtling, on the website
neighborsforneighbors.com, March 8, 1999)
Workers Rights
Labor is the biggest cost in bauxite mining and the second biggest cost,
after energy, in aluminum smelters. Most of the large producers have tried
to quell efforts by their workers to organize and raise benefits.
In North America, aluminum smelter operators are at war with unionized
workers, represented by the United Steelworkers of America and the Canadian
Auto Workers. Aluminum corporations' battles with its workers have
frequented other facilities across the globe. In 1999 and 2000, workers
were locked out at smelters operated by Kaiser, Southwire in the U.S.
Unrest also struck smelters in Germany, France, Australia, Romania,
Venezuela, and South Africa. (Stephen Johnston, "Aluminium," Mining Annual
Review, March 2000)
Alba
In October 1974, according to Human Rights Watch, strikes at the Aluminium
Bahrain plant led the country's leader, Amir Isa, to impose a state
security law that would allow the government to arrest and imprison for up
to three years without trial any person suspected of having 'perpetrated
acts, delivered statements, exercised activities or... been involved in
contacts inside or outside the country, which are of a nature considered to
be in violation of the internal or external security of the country.'"
(Human Rights Watch/Middle East, "Routine Abuse, Routine Denial Civil
Rights and the Political Crisis in Bahrain," June 1997)
More recently, human rights groups have sought protections for a 30 year
old Alba employee, Ahmed Khalil Ibrahim Hubail al-Kattab. On July 1, 1996,
Bahrain's State Security Court sentenced him and two other men to death.
The men had pled not guilty to setting a fire that killed seven Bangladeshi
workers at a restaurant earlier in the year. Their attorneys produced more
than 50 witnesses who asserted that the men were innocent
Amnesty International issued an urgent appeal to the government. Amnesty
said the trial "fell far short of international standards for fair trial"
and feared "that their execution is imminent." It said that prosecutors
relied "solely on written confessions they had made during the
interrogation. The organization fears that the defendants may have been
convicted on the basis of confessions extracted under torture." ("Security
forces kill a women, the people of Bahrain practice their right of peaceful
civil resistance," Voice of Bahrain homepage,
www.vob.org/english/news7.htm, July 1996; Amnesty International, press
release, July 23, 1996)
Billiton
Billiton, wrote Leon Pretorius of the International Labour Resource and
Information Group, "has a history of conflict with worker organizations."
(Leon Pretorius, "Regional integration and development in Southern Africa:
A case study of the MOZAL Project and its implications for workers,"
International Labour Resource and Information Group, March 2000)
In Nov. 1999, Billiton announced plans to lay off 5,000 workers from its
aluminum smelters in Richards Bay, South Africa. A month earlier, the
company successfully petitioned a court to ban a strike by the National
Union of Metalworkers of South Africa (NUMSA). The union previously struck
in August 1999 after wage negotiations disintegrated. NUMSA threatened a
"massive strike" against Billiton's "unilateral wage policy implementation"
("Numsa plans strike over Billiton layoffs," Business Day, Sept. 13, 2000;.
Mining Annual Review, March 2000)
Several times in 1998, workers at the Billiton-run Mozal smelter in
neighboring Mozambique staged strikes.("Background on South African company
Billiton," Midwest Treaty Network website)
"Although multinational corporations such as Billiton and Mitsubishi are
investing in other developing countries they keep their technology and
knowledge intensive activities in the more industrialized countries," wrote
Pretorius, referring to the two corporate owners of the Mozal project.
"Very few if any of the skills and technology of producing Aluminium will
be transferred to Mozambicans. It appears that (these) companies have been
merely using Mozambique as a way of gaining access to tax benefits, cheap
infrastructure and low cost labor."
The chairman of Mozal, Bob Barbour, claims that the consortium awarded 67
of its 110 contracts to Mozambican companies. Pretorius and others have
asserted that other companies are securing the most lucrative contracts,
including almost all of the infrastructure projects.
"Mozambique offers more flexible labor markets than South Africa," observed
Pretorius. "There are less labor regulations, weaker and less militant
trade unions, as well as much lower wages. The promise for Mozal is that it
will lead to industrial development and create jobs in Mozambique. But many
people have asked what type of industrial development and for whose
benefit? An important part of development concerns the ownership and power
to access resources. How do the unemployed and women agricultural workers
who comprise the majority of the Mozambican workforce benefit from this
project?"
Pretorius noted that "the birth pangs of the ... Mozal project have been
accompanied by worker strikes and protest action by indigenous women
entrepreneurs prevented from benefiting from the project."
About 800 workers building the smelter went on strike from Sept. 28 to Oct.
1, 1998, demanding a 600 percent pay hike. They were earning about 24 U.S.
cents per hour. After the strike ended, the company agreed to only a
two-step, 20 percent raise for unskilled workers. (Pretorius)
Kaiser
Kaiser workers, members of the Steelworkers, walked out at the Alpart
bauxite facility in Jamaica and five U.S. locations for five days in 1996.
In Sept. 1998, 3,000 workers on strike again. The Steelworkers union
offered to return to work in Jan. 1999; however, Kaiser locked them out.
(Maxxam, Amendment No. 2 to Form S-3 filed with SEC, April 12, 1996; Mining
Annual Review, March 2000)
The union and the company finally reached a settlement in September 2000.
The new labor contract cut 540 jobs (out of 2,800) at five Kaiser
facilities. Shortly thereafter, Kaiser opted to keep its Washington state
smelters closed and profited from selling its power allocation on the open
market. (Kaiser press release, Feb. 7, 2001; Kaiser Aluminum & Chemical
Corp., Form 10-Q, filed with the Securities and Exchange Commission, Nov.
9, 2000)
VII. Environmental Health
"I don't see environmental issues as a negative for aluminum or Alcoa, they
are our friend. As long as legislatures and governing bodies don't do
stupid things, we'll be fine," - Paul H. O'Neill, then-chairman of Alcoa
(now U.S. Secretary of the Treasury), as quoted in Aluminium Today, 1999.
("O'Neill's Alcoa: Big group with a big appetite," Aluminium Today, Jan. 1,
1999)
Bauxite mining
According to the International Aluminium Institute, "of the land disturbed
each year by bauxite mining, 76% is forested, 19% agricultural and pasture
and 2% shrubland." The IAI said that of the 1,591 hectares mined in 1998,
80% was wildlife habitat; 175 hectares was tropical rainforest."
(International Aluminium Institute, "Bauxite mine rehabilitation," on its
website, world-aluminium.org, 2000)
* Adjoemakondre, Surinam (Alcoa)
In a 1998 petition to the Surinam government, people of the village of
Adjoemakondre detailed the impacts of Alcoa's bauxite mining operations
that began in 1991. "Our agricultural plots and houses have been destroyed,
without any compensation," they wrote. "Our river has been polluted so
badly that we can no longer use it - wastes from the mining operation run
down hill through the village into the river, turning it an orange-brown
color; health problems have occurred from villagers using the river water;
use of dynamite by the company causes noise pollution and has contributed
to the loss of game animals we use for food; (and) destruction of the
forest and pollution of the river has also substantially limited our
ability to hunt and fish on our lands." (Wilma Prika, Captain,
Adjoemakondre, Petition to the Suriname Government Concerning the Situation
in Adjoemakondre, 1998)
* Guinea
The Friguia mining/refining operation in Guinea, according to NorWatch, has
generated "an enormous red mud deposit, which covers an entire valley. In
this valley there were previously several villages, which are now drowned
in industrial waste. Hydro admits that this deposit is not 'state of the
art', for example it is not secured with a protective membrane to prevent
leakage of caustic soda and other effluents into the subsoil water. The
subsoil water has not been tested." (Tarjei Leer-Salvesen and Morten
Rønning, "Profits on arms, forced relocation, and environmental scandals,"
NorWatch newsletter, June 1998).
Alumina refineries
The Bayer Process of refining bauxite into alumina generates red mud, also
known as bauxite residue. Depending on the grade of bauxite used, from 0.3
to 2.5 tons of red mud are generated per ton of alumina produced.
(International Aluminium Institute, "Bauxite residue," on
world-aluminium.org)
Red mud contains iron oxides, silica, titanium, zinc, phosphorous, nickel,
vanadium, and compound formed by the adding of lime into the refining
process. It is usually dumped on land near the refinery.
Liquor burning plants at refineries are a source of air pollution.
* Yirrkata, Queensland
Red mud residue and caustic soda from the alumina refinery in Yirrkata,
Queensland was found poisonous to fish. (See Aluminum and Our Environment,
International Development Action, 1976, pp. 93-96)
* Port Allen, Louisiana (Alcoa)
Federal agents executed two search warrants at Alcoa's Port Allen,
Louisiana, alumina plant in March 1999. Alcoa's subsidiary, Discovery
Aluminas, also supplied a federal grand jury with wastewater discharge and
toxic waste management records.
The refinery produces specialty alumina powders and other products consumed
in the petrochemical industry.
A month later, the grand jury indicted the Port Allen plant manager on a
charge of violating the Clean Water Act. Discovery reached a plea agreement
in October 2000, in which the company and four employees agreed to plea
guilty a felony count of violating the federal Clean Water Act and the
state enforcing regulations, pay a $700,000 fine to the U.S. government,
pay $50,000 in community restitution, and $50,000 in community restitution.
(Alcoa, Form 10-Q, submitted to U.S. Securities and Exchange Commission,
Oct. 20, 2000)
Alcoa agreed that it had poured ammonia-laden slurry into a stream that
drains into the Intracoastal Waterway, south of Port Allen, in violation of
the Clean Water Act. The discharges turned the ground white. The employees
-- two supervisors, the environmental compliance officer, and director of
management -- face possible sentences of up to one year in prison, and
fines of up to $100,000. (Mike Dunne, "Discovery Aluminas pleads guilty to
polluting Port Allen waterway," The Advocate (La.), Dec. 12, 2000)
* Western Australia (Alcoa)
The installation of a liquor burning plant at Alcoa's Wagurup refinery in
1996 brought over 300 complaints from the plant's workers and residents of
the southwestern towns of Yarloop and Waroona. Alcoa's other liquor burning
plant in Western Australia, at the Kwinana refinery south of Perth, has
generated similar concern.
The equipment burns off carbon from bauxite. Dust emitted from liquor
burning plants irritates eyes and the respiratory system. Highly
carcinogenic benzene and more than 200 other chemicals are emitted from
liquor burning plants.
According to a report commissioned jointly by The Wagerup Community Health
Awareness Group and the Australian Manufacturers Workers Union asserted in
a report that symptoms range from irritation to the eyes and respiratory
tract, to insomnia and diarrhea, to constant flue-like symptoms.
According to Ian Grant, a maintenance contractor at the Wagurup plant, Ian
Grant, said that "we were never given proper breathing apparatus. When we
complained about the conditions we were told to keep our mouths shut as the
contractor (Asea Brown Boveri)."
Grant said that he started feeling sick in Sept. 1997. His illness
continued and worsened through December. "I developed a mouthful of ulcers.
I was getting sicker every day," he said. Early the next year, "I collapsed
in a big heap and that was the end of me. My kidneys gave up. I went to a
doctor twice early in January 1998 after my lungs started bleeding again."
He said he was diagnosed with Goodpastures disease, which attacks the
body's auto immune system.
Another worker, Bill Van Der Pal, said he and many others got sick. "Only
after the workforce threatened to close down the plant did Alcoa spend $5
million to deal with the emissions from the liquor burner," he said. "They
installed a catalytic thermal oxidizer (CTO)."
(Joe Lopez, "Workers and residents in Western Australia suffer health
problems from Alcoa's alumina plant," World Socialist Website, Nov. 11,
1999)
* Bintulu, Sarawak, Malaysia and Gladstone, Queensland, Australia (Comalco)
On April 3, 2000, Comalco decided to shift the location of a proposed
alumina refinery from Bintulu, Sarawak, to Gladstone in the Austrialian
state of Queensland. Rather than draw power from a new dam in Sarawak,
Comalco will draw from Chevron new gas pipeline from Papua New Guinea (PNG)
to Queensland.
People in Sarawak had vigorously protested the planned alumina plant. More
than 100 million tons of red mud would have been dumped there. A national
park is three kilometers from the planned alumina site.
The 1,020-hectare Bintulu alumina project was projected to import generate
more than 3.3 million tons of waste each year from processing Weipa,
Australia, bauxite. New Straits Times reported in 1999 that "there have
been accusations that the company is only using Malaysia for the 'dirty
process.'" (Esther Tan, "Alumina refinery will be a really big waste
producer," New Straits Times, Oct. 9, 1999)
Prior to Comalco's decision, a Sarawak environmentalist accused the company
of a "Pollution Haven Here, Conservation Elsewhere" mentality. "The choice
of Similajau (Sarawak) 2,000 nautical miles further than Gladstone, would
only prove the Pollution Haven hypothesis. The hypothesis suggests cheaper
labour and looser environmental measures in developing country," wrote Wong
Meng Chuo.
Villagers from the nearby towns of Kg. Kuala Nyalau, Kg. Nyalau Tengah and
Kg. Ulu Nyalau wrote a letter of protect to the Chief Minister of Sarawak.
They worried that the alumina refinery would involve the acquisition of
much of their agricultural land, on which they depend. (Letter of protest
from villagers to the Chief Minister of Sarawak, April 4, 1999, as
summarized by Rengah Sarawak)
"The end product, alumina, is not an item of consumption to be enjoyed by
the majority of local people. Sarawak's environment and natural access
should be traded off with short term economic benefit for some people,"
noted Mr. Wong. (Wong Meng Chuo, "A Review of the Detailed Environmental
Impact Assessment (DEIA) of the Proposed Alumina Refinery in Similajau,
Bintulu, Sarawak," IDEAL, Sibu, Sarawak, Oct. 4, 1999)
After Comalco decided to build in Queensland, a Sarawak group warned about
"equal concerns of similar and other negative impacts at Gladstone and
PNG... The impacts of the gas pipeline connecting the two countries over
land and sea coral reef areas are of great concern. Equally of concern is
also the environmental impact of the proposed plant would inevitably bring
upon should the project go ahead eventually. The social-economic effects on
the affected communities should be attended to too. The fate of human
beings is globally linked, and shifting the problems is not a solution at
all." (MC Wong, "Bintulu Alumina Project Scrapped: A Matter of Shifting the
Problems?," Rengah Sarawak, April 7, 2000)
Aluminum smelters
On Belugas and Cancer
Belugas, like canaries in a coal mine, speak to a particular poison spewed
by aluminum smelters. In Quebec, where the Saint Lawrence River meets the
North Atlantic's frigid Labrador Current, upstream industry is devastating
a population of these small white whales. Pollution is the greatest threat
to the St. Lawrence beluga population, whose numbers dropped from 5,000 to
about 650 in the past century.
Alcan is a dominant industrial force in Quebec. It has installed a network
of dams in the Lac-Saint-Jean/Saguenay River region, with a combined
capacity of 2,687 megawatts, to fuel nearby smelters with a combined
capacity of 700,000 tons per year. (www.alcan.ca)
These smelters, like all that burn coal tar, emit chemicals called
polycyclic aromatic hydrocarbons (PAHs). In these plants, coal tar pitch
and petroleum coke are combined and baked to make anodes and cathodes for
smelting aluminum. Anode forming, baking and rodding, potlining and pot
starting activities all release toxic emissions from coal tar.
Veterinary pathologists from the University of Montreal have fingered PAHs
discharged from the upstream aluminum smelters as a contributor to a cancer
epidemic among the belugas.
According to these researchers, one out of five adults belugas suffer from
cancer, comparable to the 23% cancer rate among humans in the western
world. "Such a high percentage had never been observed in any wild animal
species, terrestrial or aquatic (with the important exception of fish). To
our knowledge, this is the first population of wild mammals that can be
compared to humans in this regard," University of Montreal researcher
Daniel Martineau observes in the website "Diseases and Causes of Death of
Beluga from The St. Lawrence Estruary, Quebec, Canada."
(www.medvet.umontreal.ca/services/beluga/beluga_homepage.html)
Some cancers in belugas have been fuelled by other toxic substances,
particularly PCBs and the pesticides Mirex and DDT. But researchers have
also found high levels of PAHs in the whales' tissues.
Dr. Lee Shugart of the Oak Ridge National Laboratory (Tennessee, USA)
examined brain tissue from three dead whales and found the PAH compound
benzo-a-pyrene. The observed concentrations of this carcinogen in the
tissue, he concluded, "would produce cancer in other laboratory animals
under similar conditions." ("Research: St. Lawrence River Belugas," The
Scientist 14[19]: 19, Oct. 2, 2000)
Dr. Martineau surmises that the belugas' diet transports PAHs from the
sediment to their tissues. "Invertebrates living in sediments contaminated
by PAH accumulate these compounds.. In summer, beluga are known to feed in
significant amounts on bottom invertebrates," he writes. The pathologist
surmises that this exposure could be the reason why he has observed seven
cases of rare small intestine cancer among the population of 650 belugas
since 1983.
According to Dr. Martineau, extraordinary levels of up to 4,500 parts per
billion of total PAH has been found in the sediment of the Saguenay River,
which is part of the belugas' habitat. The PAH originates "for the most
part from the aluminum factories located upstream."
Around the beluga's habitat lie Alcan's 206,000 ton smelter in Laterriere,
232,000 ton smelter in Jonquiere, 415,000 ton smelter in Baie Comeau, and
its new 385,000 ton smelter in Alma. Throughout the Lac-Saint-Jean/Saguenay
region, humans also suffer from unusually high cancers. According to a
Canadian government survey, the region leads the county in rates of birth
defects. It also leads the province of Quebec in deaths caused by caused by
cardiovascular and cerbrovascular diseases and malignant tumors, according
to a separate study by the Quebec Department of Health (The Scientist)
A study of Jonquierre smelter workers in the late 1970s found that 73
workers had bladder cancer, 60 percent more than was statistically likely.
The number of workers with bladder cancer rose to 130 by 1990. (ibid).
Similar horrors have visited workers at an Alcan smelter on the other side
of Canada, in the province of British Columbia. Here, in Kitimat, Alcan
operates a 279,000 ton smelter.
In October 1989, NCI Cancer Weekly reported that "Alcan... says a study has
shown that workers at its Kitimat aluminum smelter in northwestern British
Columbia have had a slightly higher risk of bladder cancer." ("Bladder
cancer risk noted; Canada," NCI Cancer Weekly, Oct. 9, 1989)
Between 1986 and 1995, the Canadian Board of Occupational Health ruled that
23 workers were disabled by or died from cancers created by on-site
exposures. Tar fumes, pitch/coke dust, PAHs and other materials caused
mesothelioma, skin cancer, bladder cancer, and lung cancer in millwrights,
potroom workers, poliners, and other operators and servicemen. (Canadian
Auto Workers Local 2301-Kitimat Smelter and Kemano Power Operaions Workers,
"WCB cancer registry data," on www.sno.net/caw2301/april98data.htm)
Medical scientists at the University of Montreal, analyzed workers health
records at Alcan's Arvida Works in Jonquierre, Quebec. In a study published
in March 1995, the doctors confirmed the "relationship between exposure to
coal tar pitch volatiles and bladder cancer among primary aluminum
production workers." (Tremblay C, Armstrong B, Theriault G, Brodeur J,
Departement de medecine du travail et hygiene du milieu, Universite de
Montreal, "Estimation of risk of developing bladder cancer among workers
exposed to coal tar pitch volatiles in the primary aluminum industry,"
American Journal of Industrial Medicine, March 1995 (27(3):335-48.)
Despite the long known correlation between coal tar pitch exposure to
cancer in workers, it was not until December 1999 that Alcoa warned 3,000
workers at its Australia smelters about the danger. The company also
ordered new measures at its smelters worldwide to reduce coal tar exposure.
"The letter did not explain why the company had waited five years before
informing workers of the results of the 1995 study of Alcan employees at
the Arvida smelter in Quebec," noted Margeret Rees of Australia. (Margaret
Rees, "Alcoa Australia admits cancer dangers," World Socialist Web Site,
January 15, 2000.)
In fact, according to an article in the Herald Sun of Australia, Alcoa knew
of potential cancer risks in its Portland and Point Henry smelters since at
least 1989. "A medical specialist at Melbourne's respected Peter MacCallum
cancer hospital sounded alarm bells over potential cancer and chronic
asthma dangers in 1989. Cancer expert Dr. Cyril Minty warned pot room and
other workers at the Portland and Point Henry smelters could develop the
diseases if they continued to work in the same conditions for a long time."
When the newspaper reported the doctor's warning, Alcoa demanded a printed
retraction and said that it "emphatically rejects" any cancer risk among
smelter workers. (Karen Collier and Mark Dunn, "10 years of warnings,"
Herald Sun, Dec. 16, 1999)
Alcoa sent similar warnings to thousands of its current and former
employees worldwide. Recent studies, said Alcoa spokesman David Neurohr,
found "a small increase in cancer could be expected at lower levels of
exposure than had previously been expected... We are just being responsible
in keeping our employees informed." ("Alcoa health warning," Mining
Journal, Dec. 17, 1999; "Alcoa warns employees of possible cancer risk,"
Chicago Tribune, Dec. 20, 1999)
Spent pot lining
Every 6 or 7 years, carbon linings are replaced in pots used in aluminum
smelters. This lining (or cathode) is made of refractory bricks and carbon.
It also contains material from the electrolytic bath: heavy metals and
cyanide. (International Aluminium Institute, "Cathode waste," on its
website world-aluminium.org)
Around the world, most spent potlining is landfilled. Some is stored above
ground in a dry chamber. In the United States, the Environmental Protection
Agency first listed spent potliners as a hazardous waste (code K088). It
prohibits the landfilling of spent potlining unless it has been treated to
reduce the amount of hazardous constituents: 25 in all, including cyanide,
fluoride, toxic metals (including lead and mercury), and PAHs. (U.S.
Environmental Protection Agency, "Land Disposal Restrictions; Treatment
Standards for Spent Potliners From Primary Aluminum Reduction (K088) and
Regulatory Classification of K088 Vitrification Units," Federal Register,
July 12, 2000 (Vol 65, No. 134), pp. 42937-42959)
According to a June 20, 1998, report in the main newspaper of Surinam, De
Ware Tijd, Alcoa's subsidiary might bury toxic waste not only from its
Suralco smelter but also waste from abroad. "Suralco is planning to bury
its chemical waste, the so-called 'spent pot lining' (SPL), just as it did
in 1993. It will not only bury waste from the aluminum smelter at Paranam,
but also chemical waste from the parent company Alcoa in Pittsburgh," the
Forest Peoples Project quoted the newspaper as reporting. ("Maroon
Community Petitions Suriname Government about the Operations of a US-owned
Bauxite Mining Company," Forest Peoples Programme, September 17, 1998)
Illegal wastewater discharges
In March 2000, Alcoa agreed to pay $8.8 million to settle environmental
claims filed by the federal Justice Department and the Environmental
Protection Agency. The agencies charged Alcoa with violating the Clean
Water and Clean Air Acts at its Warrick, Indiana, sheet production plant.
The payout included a $2.4 million fine; the balance will be spent to
reduce hazardous waste generation and study air pollution reduction
technology.
The Justice Department alleged that Alcoa "illegally discharged
inadequately-treated wastewater to the Ohio River from 1994 until 1999,
while company-sponsored tests showed that the mixture of pollutants in the
wastewater was deadly toxic to fish and invertebrates." (U.S. Department of
Justice, "Alcoa to pay $8.8 million to settle environmental claims," press
release March 13, 2000)
Asthma
In 1999, the Comalco/Rio Tinto-controlled Boyne Smelters Ltd of Australia
settled a ten-year lawsuit filed by 18 pot room workers. Boyne paid over
A$1 million to settle claims that they contracted asthma working at the
smelter. (Stephen Johnston, "Aluminium," Mining Annual Review, March 2000)
Flouride emissions
Flourides are produced during the reduction of alumina, during "anode
effects." Small quantities of these emissions have big impacts.
The contributions of these emissions are discussed in the Global Warming
chapter of this report. The principal kinds of fluorides emitted,
tetrafluoromethane and hexafluoroethane, also have significant local health
impacts.
In India, the NALCO aluminum smelter in Angul, Orissa, is widely believed
to be the source of severe fluoride contamination among people and animals
living nearby. This plant discharges more than 220 tons of fluoride into
the groundwater and surface water, according to 1992 tests run by the
Orissa State Prevention and Control of Pollution Board. ("TTPS releases SPM
into Nandira," Nandira, March 1993)
Many villagers have reported brittle bones, tooth and gum diseases, lumps
of dead skin, and a host of other symptoms of fluorosis. Cattle, more prone
to fluoride contamination, commonly suffer from bone deformities, the loss
of teeth, a sharp drop in birth rates and a sharp rise in death rates. In
one village, one kilometer from the Angul plant, the number of cattle
declined from 3,000 to less than 100 head over a ten year period. ("The
Spectre of Industrial Pollution in Angul-Talcher Area," Nandira newsletter
of District Industrial Pollution Control and Citizens' Action Project,
Dhenkanal, Angul, late 1993, p. 16)
Although state regulators have demanded that NALCO provide piped water to
local villages, company officials have denied that they are responsible for
the fluorosis outbreak, and the resultant decimation of the local cattle
herds. The smelter's discharge canal, which flows into the Nandira river,
is used by people for bathing, washing clothes, and drinking. (Nandira,
1993)
In the same Indian state, the Indalco smelter caused widespread fluorosis
among local villagers. In 1990, scientists from G.M. College of Sambalpur
examined villagers and found that an astounding 67 percent of men and 64
percent of women suffered from fluorosis. People aged 12 to 19 were most
severely impacted. The researchers also found that the water and vegetation
in the areas were "highly contaminated by fluorides." (U.N. Samal and B.N.
Naik, "Dental fluorisis in human beings around an aluminium factory of
Orissa," Journal of Environmental Biology, V. 11, No. 4, Oct. 1990)
Despite this track record, in 2000 and 2001 Nalco is expanding its capacity
from 230,000 to 345,000 tons. (Stephen Johnston, "Aluminium," Mining Annual
Review, March 2000)
In British Columbia, Alcan's Kitimat smelter is Canada's largest emitter of
hydrogen fluoride. In 1997, the plant released over 485 tons of hydrogen
fluoride, accounting for 9% of the province's on-site releases. (Burkhard
Mausberg, Canadian Environmental Defense Fund in Toronto)
The 514,000 ton per year aluminum smelter in Tursunzade, Tajikistan, has
been "the source of significant adverse health effects, both to the
residents of Tursunzade in Tajikistan and the bordering communities in
Uzbekistan. Livestock were losing their teeth and dying, and the teeth of
local children have been found to be discolored," according to the Slavic
Research Center. The plant emitted, at peak operating capacity, 193 tons of
fluorides annually. (Bakhtior Islamov, "Aral Sea Catastrophe: Case for
National, Regional and International Cooperation," Slavic Research Center,
1998)
Sulfur Dioxide
The aluminum industry generates sulfur dioxide emissions through the
burning of fossil fuels at its captive power plants, the generation of
steam at alumina refineries, and the consumption of anodes in smelter pots.
Point Comfort, Texas (Alcoa)
Alcoa's refinery and smelter complex in Point Comfort, Texas, is a federal
Superfund site. According to the National Oceanic and Atmospheric
Administration, "between 1948 and the present, Alcoa has constructed and
operated several types of manufacturing processes at this facility,
including aluminum smelting, carbon paste and briquette manufacturing,
gas processing, chlor-alkali processing, and alumina refining. Past
operations at the facility have resulted in the release of hazardous
substances into the environment, including through the discharge of
mercury-containing wastewater into Lavaca Bay from 1966 to 1970 and
releases of mercury into the bay through a groundwater pathway. In
April 1988, the Texas Department of Health issued a 'closure order'
prohibiting the taking of finfish and crabs for consumption from a
specified area of Lavaca Bay near the facility due to elevated mercury
concentrations found in these species." (National Oceanic and Atmospheric
Administration, "Alcoa Point Comfort/Lavaca Bay NPL Site, Point Comfort,
Texas: Notice of Availability and Request for Comments on a Draft Damage
Assessment and Restoration Plan/Environmental Assessment for Ecological
Injuries and Service Losses," Federal Register, July 14, 2000 (Volume 65,
Number 136), pp. 43739-43740)
IX. Aluminum and global warming
[see old chapter nine]
The aluminum industry is a significant contributor to global climate change
for two reasons: (1) it consumes enormous amounts of energy, much of it
fossil fuels such as coal that release carbon dioxide when burned and (2)
aluminum smelters produce small quantities of extremely potent greenhouse
gases.
An MIT study found that the industry emits the equivalent of over 3 billion
tons of carbon dioxide per year, or about 1 percent of global emissions of
anthropogenic greenhouse gas emissions. This study further predicts a rise
in total emissions to around 4 billion tons of carbon dioxide equivalent by
the year 2030.
In 1999, The Australia Institute, an environmental group, reported that
shutting down the country's smelters would be a net economic benefit for
Australia. It claimed that subsidies of A$410 million for inexpensive
energy and A$430 million for "unpaid" greenhouse gas emissions outweigh the
smelters' economic contributions. (Stephen Johnston, "Aluminium," Mining
Annual Review, March 2000)
Carbon dioxide
The industry emits carbon dioxide at each stage of production, from the
mining and processing of bauxite, to the electrolytic refining of alumina,
and the casting of aluminum.
A quintet of Massachusetts Institute of Technology scientists, led by
Jochen Harnish, in a 1999 study titled "Primary Aluminum Production:
Climate Policy, Emissions, and Costs," found that "the source of electric
energy used for the electrolytic reduction is the single most important
factor influencing total carbon dioxide emissions from primary aluminum
production. The specific emissions of CO-2 vary by a factor of five
depending on whether coal or hydroelectricity is used as a source of power
for the reduction cells." (Jochen Harnisch, Ian Sue Wing, Henry Jacoby,
Ronald Prins, "Primary aluminium production: climate policy, emissions and
costs," paper presented at the Kyoto and Montreal Protocols' Joint Expert
Meeting, Petten, May 1999)
Another study has calculated that the aluminum production cycle, including
mining, processing, refining, and casting, produces about 12 tons of carbon
dioxide per ton of aluminum produced. (R. Huglen and H. Kvande, "Global
considerations of aluminium electrolysis on energy and the environment,
Light Metals 1994, pp. 373-380)
The industry's International Aluminium Institute has lower carbon dioxide
estimates of 7.4 tons of carbon dioxide per ton of aluminum production
(including 5.8 tons from energy and 1.6 from the electrolytic process).
(IAI, "Aluminium's Life Cycle," on website world-aluminium.org, 2000)
The MIT study predicts that CO-2 emissions from the industry will rise from
about 2 billion tons in 1985 to about 3 billion tons in the year 2030. The
more coal that is consumed to power new capacity, the more emissions will
occur. If 75% of new capacity is fueled by coal, then the amount of CO-2
generated per ton of aluminum cast would increase from 12 to 18.3 tons.
PFCs
In 1991, Dr. Dean Abrahamson of the University of Minnesota discovered that
primary aluminum smelters produce two extremely potent greenhouse gases:
tetrafluoromethane and hexafluoroethane.
With atmospheric lifetimes are at least 10,000 years, these are some of the
longest-lived atmospheric pollutants. The gases have global warming
potentials that are 6,500 to 9,200 times higher than carbon dioxide. The
emission of one kilogram of tetrafluoromethane would have the same climate
change effect, over the subsequent 100 years, as 6.5 metric tons of carbon
dioxide. ("Greenhouse worries for the aluminum industry," Energy, Economics
and Climate Change, Jan. 1992; Harnisch et al.)
The MIT scientists suggested that "in view of the PFCs' atmospheric
stability and their large specific radiative forcing relative to most other
greenhouse gases, increased scientific focus on these compounds is
warranted." (Harnisch et al.)
These two gases are the unintentional byproduct of using fluorine in the
electrolytic reduction of alumina, formed during the "anode effect," when
the electrolyte is depleted.
Harnisch, et al, estimate that each of ton of aluminum production created
about 0.48 kilograms of tetrafluoromethane in 1995. Technological
improvements brought this level down 30 percent from emission rates in the
1980s. Still, the primary aluminum industry generated about 9,400 tons of
this PFC in 1995, or about 90 percent of all tetrafluoromethane emissions
worldwide. This is the global warming equivalent of 59.22 million metric
tons of carbon dioxide.
The MIT study further estimates that in 1992, aluminum smelters emitted
about 1,300 tons of hexafluoroethane, or the greenhouse gas equivalent of
11.96 million tons of CO-2. Primary aluminum production accounted for about
65 percent of this chemical's total emissions; plasma etching in the
semiconductor industry accounted for the balance of hexafluoroethane
emissions..
Proportionally, smelters employing Vertical Stud Soderberg and Sidework
Prebaked technology account for most of the industry's PFC emissions. The
MIT study estimated that in 1995, these two technologies generated 65
percent of emissions even though they accounted for only 30 percent of
production. (Harnisch et al)
The International Aluminium Institute uses a grouping of technologies.
First generation plants built between 1940 and 1955 emit between 12-15
kilograms of PFCs per ton of metal produced; those built between 1955-75
emit 2-6 kilograms per ton; and "third generation plants" (1975-today),
emit from 0.3 to 1 kilogram per ton. (Interantional Aluminium Institute,
"Smelter emissions," on its website, world-aluminium.org)
Hydro power
In addition to greenhouse gas emissions from smelters and captive fossil
fuel-fired power plants, the aluminum industry further contributes to
global warming through its heavy usage of hydroelectric power. In tropical
countries, where smelters have congregated around great dams, massive
amounts of vegetation decay in flooded forests. The decaying organic matter
produces huge amounts of methane and carbon dioxide. In Brazil, one
scientist calculated that a dam over a 50-year period would produce as much
greenhouse gas as a coal-fired plant producing the same amount of power.
(Pratap Chatterjee, "Dams a major source of global warming say scientists,"
Inter Press Service, Nov. 29, 1995)
Aluminum smelters consume over half of the power generated from the Tucurui
reservoir in northern Brazil. The reservoir demonstrated substantial, but
highly variable, greenhouse gas emissions in a recent two year period
studied by the World Commission on Dams. In 1998, it emitted 76.4 tons of
methane and 3,808 tons of carbons dioxide per square kilometer per year.
The next year, these figures dropped to 5.33 and 2,378 tons, respectively.
Estimated emissions for the 2,600 kilometer reservoir totaled 198,640 tons
of methane and 6,182,800 tons of carbon dioxide in 1998.
The WCD concluded that "there is no agreement on whether the net greenhouse
emissions from the reservoir, spillway, and turbines are offset by the
saving in emission from fossil fuel sources made possible by the large
amount of power produced by Tucurui." (World Commission on Dams, "The
Report of the World Commission on Dams," 2000, p. 77, 121, 122)
Aluminum industry lobbying
In 1997, 39 heavily industrialized countries, collectively called "Annex B"
countries, committed to reduce greenhouse gases under the terms of the
Kyoto Protocol to the United Nations Framework Convention on Climate
Change. The countries agreed to restrict their emissions over the period
2008-2012 to between 92-110 percent of 1990 levels. For emissions of PFCs,
hydrofluorocarbons (HFCs), and sulfur hexafluoride, countries may set the
baseline date at 1995.
The aluminum industry is fighting governmental actions to restrict their
greenhouse gas emissions. In 1999, the Aluminium Federation in the U.K.
worked against a Climate Change levy. According to Mining Annual Review,
"the primary smelting industry was exempted and some other modifications
were made, but the Aluminium Federation said that the bill would hurt
Britain's non-primary aluminium industry and that they would prefer a levy,
such as in the Netherlands, based on deviation from benchmarked best
practices." (Stephen Johnston, "Aluminium," Mining Annual Review, March
2000)
In Europe, seven producers -- Alcoa, Alcan, alusuisse (now part of Alcan),
Hoogovens (now part of Corus), Hydro, Pechiney, and VAW -- launched an
"Aluminium for Future Generations" initiative in 1998. In meetings with
government officials, parliamentarians, academic institutions, and
non-governmental organizations, the aluminum alliance emphasizes the need
for voluntary, not mandatory, action. "In many countries across Europe the
industry has entered into a range of national voluntary agreements to
reduce greenhouse gas emissions, since it believes that the reduction of
emissions can best be achieved through a combination of voluntary
agreements and market-based flexible mechanisms," reads the alliance's
website. "The aluminium industry is particularly concerned to adopt a
global approach to the issue of climate change and has therefore been
involved in discussions regarding implementation of the Kyoto Protocol at
international level, through the International Primary Aluminium
Institute." (Aluminium for Future Generations at
http://www.eaa.net/pages/fut_gen/fut_generat.html)
In the United States, aluminum companies are integral members of the Global
Climate Coalition, an industrial lobby credited with derailing U.S.
activism on the issue. Members include Kaiser and The Aluminum Association,
which is a U.S. lobbying group whose members include Alcoa, Alcan, Hydro,
Kaiser, Ormet, Pechiney, VAW, and dozens of other companies. (Boycott
Global Climate Coalition Companies (GCC) at
http://www.islandpress.org/earthday/gcc.html; The Aluminum Association at
http://www.aluminum.org/memberslist.cfm/1/7)
In Australia, David Coutts, executive director of the Australian Aluminium
Council outlined the industry's case at a government-sponsored conference
on climate change in 1999. "Greenhouse gas levels are still well within
historical boundaries and likely to remain there for a considerable time,"
he said. "The science of how these rising levels will effect the climate is
still far from clear and high priority needs to be given to improving that
knowledge so we can best judge how to act."
Coutts praised the government for standing by the industry during Kyoto
negotiations. To its great credit the Australian Government understood
these messages and took a firm position to Kyoto," he said. "Against all
the odds, a relatively sensible outcome was achieved at Kyoto. The
Australian negotiating team played a key role in this outcome and the
resources sector gave them the highest praise for this achievement. The
protocol is not going to immediately solve the problem of rising greenhouse
gas levels but at least it has put in place a process to start doing
something realistic about it."
He emphasized the importance of the aluminum industry to Australia's
economy. "If a favorable investment climate for Australia is maintained
then the alumina and aluminium metal sectors could easily grow by more than
30% in the period through to 2020," he predicted. "The aluminium industry
is already Australia's second largest export industry, with exports
predicted to be well over $5 billion in 1997/98. The industry is the world
leader in bauxite and alumina and the third largest metal exporter-after
Russia and Canada-and we are not all that far behind them with the latest
expansions at Boyne Island and Tomago.
"This expansion will be difficult to achieve if the competitiveness of
Australia is eroded. It depends on competitive supplies of raw materials
and world competitive energy, especially electricity. Australia is
currently at the lower end, on average, of the smelter cost curve and is
the world's most efficient region when it comes to converting electricity
into aluminium. These achievements have been hard won and could be all too
easily eroded," he continued.
"If we put the expansion of the aluminium industry at threat in Australia
by forcing energy costs up, then new investment will be in countries such
as India and China; probably operated less efficiently than in Australia;
and more than likely using Australian coal for electricity generation.
That won't help the greenhouse global problem but it surely will harm the
Australian economy," Coutts concluded. (David Coutts, "Greenhouse beyond
Kyoto issues, opportunities and challenges: The resources industries
perspective," March 31, 1998, at
http://www.brs.gov.au/social_sciences/kyoto/greenh.html)
Annex B countries host about 70 percent of world aluminum capacity, which
is not addressed at all under the current Protocol
In 1997, an article in The Guardian echoed Coutts' claim that the
Australian "government has presented industry lobby interests as synonymous
with the national interest. The green stance of the public has been
systematically eroded through a well-orchestrated campaign to portray
global warming as little more than a theory that scientists can't agree on.
Their strategy was aimed at crippling the impetus for government action to
solve these problems because such action might adversely affect corporate
profits." (Sharon Beder, Paul Brown and John Vidal, 'Who Killed Kyoto?',
The Guardian, Oct. 29, 1997)
VIII. Energy
Aluminum smelters congregate around sources of inexpensive energy. This is
the inevitable outcome of an industry that consumes enormous amounts of
power; on average, 45% of the cost of aluminum smelting is electricity. .
According to the Worldwatch Institute, the world's aluminum industry
consumed almost as much power in 1990 as the entire continent of Africa.
As energy resources become squeezed in the industry's cradles -- along the
great rivers of the northwestern United States and the depleted coal seams
of Western Europe -- production is shifting to the Third World. Powerful
rivers in South America and Africa, coal mines in eastern India, and oil
fields of the Middle East are beginning to fuel the increasing global
demand for aluminum.
The industry's hunger for power produces engineering marvels, tragic
disparities, and ecological devastation. In places like Suriname,
powerlines en route to smelters tower over new communities inhabited by
indigenous people forced to move from homelands flooded by new
hydroelectric dams. As seen in Chapter XXX, an industry that has built some
of the world's largest dams can not be bothered with compensating people
who were forced to move out of its way.
Power mix
The production of a ton of aluminum consumes between 14 and 18.5
megawatt-hours of power. (Alcan 10-K, FY1999) Harnisch et al estimate that
in 1985, the industry's power sources were 57% hydro-electric, 33% coal, 5%
nuclear, 4% gas, and 1% oil. Existing smelters are likely to continue with
the same power sources. The MIT scientists projected that coal could power
between 25 and 75% of new capacity built through 2030. (Harnisch et al,
1999)
The International Aluminium Institute asserts that "more than 55 percent of
the world's primary aluminum is produced using hydro-electric power" and
that this percentage "will be maintained for the foreseeable future." The
industry institute's survey of new smelters that are due to come on line in
the next eight years found that "at least 55% will be hydro powered, a
maximum of 30% coal fired and 15% gas." (IAI, "Energy Use" and "Future
Electricity Supply" at world-aluminium.org)
Focus: The Pacific Northwest Power War
Deregulation of the electricity industry in North America began wreaking
havoc in the western USA in 1999 and 2000. This chaos has ties to the
aluminum industry. The construction of massive dams corresponded with the
proliferation of aluminum smelters in the Pacific Northwest. Aluminum
companies own or hold purchasing contracts for many of these dams. Some
smelters have closed when corporations found it more profitable to sell
power earmarked for their operation on the open market.
Aluminum companies have long benefited from generous relationships with
Pacific Northwest power producers. Alcoa held a monopoly in the Pacific
Northwest in the early 20th century after it secured provisions in its
contracts with hydroelectric suppliers that "made power available to
(potential) rivals at entry-forestalling prices. This practice ceased under
the terms of a 1912 consent decree," according to Arkansas State University
economist Dr. Christopher Brown. (Dr., Christopher Brown, Department of
Economics & Decision Sciences, Arkansas State University, "Alcoa and
beyond: Toward a 'structural' approach to section 2," at
http://www.clt.astate.edu/crbrown/alcoa.htm)
More smelter operators rushed into the northwest U.S. in the 1930s and
1940s. "The aluminum plants are here because there was cheap power" said
James Wright of the Seattle Post-Intelligencer. "During the Depression, the
Works Progress Administration, the government, built a series of
hydroelectric dams -- Grand Coulee, the Columbia, the Bonneville Dam on the
lower Columbia -- and that brought the aluminum plants here during the war,
because none of the other materials used in the manufacture of aluminum are
found in the Northwest. It's all brought here. What we offer is cheap
electricity. If we can't offer that, there's no sense making aluminum
here." ("James Wright discusses how some northwest aluminum companies are
reselling contracted electricity and making profits," All Things
Considered, National Public Radio, Jan. 12, 2001)
Smelter operators are trying to maintain their advantageous arrangements
with the government-owned Bonneville Power Administration (BPA). The BPA
operates 29 dams in the Columbia and Snake river basins, and sells its
power to utilities and large industries in Idaho, Oregon, and Washington,
and parts of California, Montana, Nevada, Utah and Wyoming. (Lynda Mapes,
"BPA caught in a crunch, Energy crisis sours Northwest's sweet deal with
Bonneville," Seattle Times, Jan. 29, 2001)
In 1999, Alcoa, Kaiser, Reynolds, Vanalco, and Columbia Falls Aluminum sued
the BPA as a 20-year pact neared expiration. They disagreed with the BPA's
power allocations in new five-year contracts scheduled to begin in October
2001. Alcoa and Vanalco "took a novel approach, claiming first amendment
rights to redress grievances with the US Government," reported Mining
Annual Review (March 2000).
The suits failed. By January 2001, all of the producers reluctantly signed
new five-year contracts with the BPA. The agreement allocates 1,486
megawatts of BPA's hydroelectric power to the seven companies, roughly half
of their combined requirement. The contract charges the producers $23.50
per megawatt hour. ("Unhappy aluminum smelters ink BPA power deals,"
Purchasing, Jan. 11, 2001)
Reynolds said the contract would increase its BPA purchase rates by 13%
over the previous contract that covered the years 1981 to 2001. Kaiser said
its BPA energy prices would rise by 20%. (Reynolds 10-K, FY1999; Kaiser
8-Q, fourth quarter 2000)
The new contract still guarantees aluminum producers some of lowest-priced
power in the United States. The deal sets prices at about one-half the
average U.S. per-megawatt hour charge on the national market. (Seattle
Times, Jan. 29, 2001)
Some companies have the right to resell BPA power until the current
contract expires in September 2001. Beginning in the summer of 2000, as
energy prices soared in the Western U.S., these companies started to close
smelters and re-sell BPA power.
In June 2000, Alcoa announced that it was halting production at its
121,000 metric ton smelter in Troutdale, Oregon. It agreed to sell some
power back to the BPA at a reduced rate. (Alcoa, Form 10-Q, submitted to
U.S. SEC, Oct. 20, 2000; Susan Kelleher, "BPA wants Kaiser to share
millions," Seattle Times, Feb. 1, 2001)
In western Montana, Columbia Falls Aluminum closed its smelter, and is
reselling its power. It has agreed to forward 25% of the power sales
proceeds to the BPA. Six hundred workers are idle, but Columbia Falls has
agreed to maintain their salaries and benefits through 2001. (Kit
Miniclier, "Electric sellback in Mont. a model Factory will shut; workers
still paid," Denver Post, Jan. 25, 2001)
Golden Northwest is selling power from electricity designated for its
smelters in The Dalles, Oregon, and Kilimat County, Wash. It estimated the
sales would earn about $400 million through September 2001 Golden has said
that 25% of its revenues from the sales will be passed along to the BPA.
Another 25 to 50% of the revenue will develop a gas turbine and possibly a
wind power plant for a replacement secondary smelter. The moves earned the
support of the plant's union and the BPA. (Hal Bernton, "Jobs meltdown:
Goldendale smelter slashes aluminum production in order to resell its BPA
power," Seattle Times, Feb. 4, 2001)
Kaiser has made no such pledges to channel energy sales profits to the BPA,
its laid-off workers, or the development of alternative power plants.
Beginning in June 2000, the company curtailed production at its Tacoma and
Mead, Wash., smelters and sold power on the open market. The sales, which
could earn Kaiser $500 million until the contract expires in October, have
provoked outrage from the plant's workers and the BPA.
"It's difficult to conceive of a circumstance that would prevent them from
coming to terms with the region's other ratepayers and their employees,
given the amount of windfall profit," said BPA spokesman Ed Mosey in
January 2001. The agency is contemplating turning off its power supply to
Kaiser in October. (Seattle Times, Feb. 4, 2001)
"There's no way they should be profiteering from reselling federal power
and then ask us to draw unemployment," said Wayne Bentz, who represents
Kaiser Mead smelter workers as Steelworkers Local 329 steward. Over 900
workers are unemployed due to Kaisers' shutdown. (John Stucke, "Kaiser
denies idled workers' wage request," Spokesman-Review, Jan. 31, 2001;
Seattle Times, Feb. 1, 2001)
Kaiser Vice President Pete Forsyth called the BPA demands unreasonable and
"said the money is really a savings account that the company will have to
drain to buy a much more expensive supply of power starting this fall,"
according to the Spokesman-Review. (John Stucke, "Kaiser ponders asset
sale," Spokesman-Review (Spokane, Wash.), Feb. 2, 2001)
BPA was forced to buy back power for more than 20 times than it cost the
agency to produce it, according to the Seattle Times. Under the 1996-2001
contract, Kaiser pays BPA $22.50 per megawatt-hour. In late 2000, the open
market price in the western U.S. soared as high as $750 per megawatt-hour.
(Seattle Times, Jan. 29 and Feb. 1, 2001; Denver Post, Jan. 25, 2001)
Other shutdowns
Aluminum companies have shut down smelters to sell their electricity
allocations in other places. In the summer of 1999, skyrocketing
electricity prices in the midwestern U.S. led Alcan and Southwire to
curtail production at their Sebree and Hawesville smelters and sold their
captive power (105 and 90 megawatts, respectively) to the grid. (Stephen
Johnston, "Aluminium," Mining Annual Review, March 2000)
In May 2000, Ormet announced that it would limit production at its
Hannibal, Ohio, smelter during the summer and would lay-off, temporarily,
270 workers. "This is an endeavor that no other company in our industry has
been able to accomplish," said Emmett Boyle, chairman, president and CEO of
Ormet Corporation. "This will make us a more competitive force and will
strengthen our company's position in the future. We will continually review
the value of selling power to determine if it's a healthy business venture
for the company. We'll be looking for a proper balance of energy and metal
sales that will ultimately strengthen the company's portfolio."
"The decision to curtail aluminum production at this time ultimately came
down to three economic factors which include extremely low aluminum prices,
higher than usual alumina prices and higher electrical energy prices in the
peak summer months," explained a company press release. (Ormet, "Ormet
Announces Plans to Curtail Aluminum Production, Sell Power and Alumina,"
company press release, May 18, 2000)
Ramifications of electricity deregulation in the U.S. reaches across the
border into the Canadian province of British Columbia. In late 2000, Alcan
announced plans to shut down three potrooms in its Kitimat Works. The
plant's union, Canadian Auto Workers Local 2301, said the shutdown is the
result of provincial and corporate "greed."
"This whole situation stems from the government's 'greed' of making huge
profits by selling power across the border and Alcan's never ending
'Corporate Greed' of maximum profits no matter who or what it affects," the
CAW local asserted in a Dec. 14, 2000, statement. "The sad part is that our
members are being used as pawns in this battle. The closing of these lines
would have a huge impact on the community and is a direct attack on the
integrity of our local union 'Alcan must be stopped' for the sake of our
union brothers and sisters whose jobs will be affected. If we don't stop
this now who knows, maybe next year more jobs will be eliminated. If the
price of power is right! ("Union Says "No" to Line One Shutdown," CAW Local
2301, Dec. 14, 2000)
"If Alcan committed to a bad power deal they should pay the price. Our
members, and our community should not have to be the ones that pay the
ultimate cost. When times were good, Alcan didn't mind reaping all the
additional profits for the last few decades on the surplus power. Yet now
when fortunes turn temporarily around, they don't want to put any of that
'surplus' back into Kitimat Works to save jobs. We remind Alcan that it
also has a commitment to our community as well. Not just their profitable
power commitment with BC Hydro," added the CAW local. (ibid)
The situation marked a quick turnaround by the BC government. As recently
as December 1997, BC's premier "invited producers to build smelters in the
province with an offer of cheap electricity," according to the Mining
Journal (June 5, 1998)
Hydro
Hydroelectric dams have fueled the proliferation of aluminum smelters in
other parts of the world, often at the expense of local communities. As
Joji Carino of the World Commission on Dams reported in 2000, "The
experience of indigenous peoples and ethnic minorities with dam projects is
rife with alienation, dispossession both from their land and other
resources, lack of compensation or inadequate compensation, human rights
abuse and lowering of living standards." (Joji Carino, "Review of
Hydroelectric Projects and the Impact on Indigenous Peoples and Ethnic
Minorities," World Commission on Dams, 2000)
Details on the relationships of smelters to some massive hydroelectric
projects follow.
Brazil
The Brazilian aluminum industry tripled in size from 1978 to 1985, when the
Tucurui dam was completed in the Amazon. The dam, created a 2,500 square
kilometer lake and spawned the Albras, Alumar, and Alunorte alumina
refinery and aluminum smelters owned by Alcoa, Alcan, Billiton, and a
consortium of Japanese companies. These aluminum operations consume over
half of the dam's power. (Latin American Newsletters, Nov. 23, 1984;
Financial Times, Nov. 16, 1995)
The Brazilian government,
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