Mytilineos sees bright future in alumina in next 5 years

Mytilineos Holdings SA, a Greek metals and energy group, may produce 83 percent more alumina, a raw material used in aluminum production, over the next five years, said Evangelos Mytilineos, the company?s chief executive officer.

Production should climb from 820,000 metric tons a year to 1.1 million tons by the end of 2013 and may reach 1.5 million tons by 2016 in the second phase of expansion, Mytilineos said.

?We anticipate very healthy demand for alumina in the region,? Mytilineos said, referring to Europe, in an e-mailed response to Bloomberg questions Wednesday.

Alumina demand will exceed output in Europe by about 4.1 million tons this year, according to London-based researcher CRU. The deficit should widen to 4.6 million tons next year, said Nikhil Shah, a CRU analyst.

?There seem to be no plans for Eurallumina in Sardinia to restart and a gap of more than 1.5 million tons per year has been created, which is covered by Aughinish, Aluminium of Grece and imports from other areas,? Mytilineos said.

Alumina production at the United Co Rusal-owed EurAllumina refinery in Sardinia, which has a 1.1-million-ton capacity, has been idled since 2009. Rusal, which also owns Aughinish in Ireland, Europe?s largest alumina-making plant, said on September 2 it plans to raise output at the refinery to 2 million tons a year from 2012. About 2 tons of alumina are needed to produce 1 ton of aluminum.

The majority of Mytilineos?s alumina output goes to Glencore International Plc as part of a 10-year sales deal. Athens-based Mytilineos Holdings, which owns Aluminium of Greece SA, will also increase aluminum output 9 percent to 180,000 tons by the end of 2012, Mytilineos said. ?For the aluminum metal, we have a very positive view mid- to long-term as far as its global demand prospects are concerned,? he said.

?We are in the process of creating a bigger minerals and metal division within our group through various acquisitions and in-house growth,? Mytilineos said. ?One of the acquisitions will probably be announced later this month.? The company plans to list on the Toronto Stock Exchange once the acquisitions are completed.

The market for aluminum outside of China ?may take a small beating? from the global economic slowdown, according to the company. ?We may see some declines in sales,? Mytilineos said. He expects to conclude next year?s aluminum sales at lower premiums compared with this year?s contracts because of lower demand.

Aluminum output in the Western world should exceed demand by about 800,000 tons this year, with the surplus narrowing to 680,000 tons next year, and moving into deficit in 2015, according to Societe Generale SA.

Aluminum for three-month delivery rose $5, or 0.2 percent, to $2,375 a ton by 1.10 p.m. on the London Metal Exchange.

The group has no plans to restart the Copsa Mica lead and zinc smelter in Romania, Mytilineos said. The smelter operates as a lead refinery for the time being, he said.

Sometra SA, controlled by Mytilineos, suspended output at Copsa Mica in January 2009 and cut 820 jobs after lead and zinc prices tumbled. [Bloomberg]

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