Venezuela Venalum-2: To Name $600M Contract Winner Jan 10
Monday January 6, 11:13 PM
CARACAS (Dow Jones)--December aluminum production at Venezuela's 80%-government-owned CVG-Industrie Venezolana de Aluminio, or CVG-Venalum, was a bit more than 37,400 tons, the best in the company's history, public affairs manager Leonardo Bezzara said Monday.
An ongoing 36-day-old strike general strike "had us worried for a little bit," but never shut production, Bezzara told Dow Jones Newswires in a telephone interview. Production during the year was a record 436,000 tons, he said.
Bezzara said a severe shortage of natural gas, due to the strike that began Dec. 2, shut production briefly at Bauxilum, the country's only supplier of alumina, the main raw material in aluminum production.
ADVERTISEMENT But Venalum has a constant 30-day supply of alumina in storage, while its sister aluminum producer Alcasa has a 10-day supply and Bauxilum, itself, had a 15-day supply, he said.
Gas supplies were returned to minimal required levels a few days after Bauxilum shut down, after an agreement was reached between the government and dissident managers at PdVSA Gas, the natural gas arm of state oil monopoly Petroleos de Venezuela SA (E.PVZ).
PdVSA officials agreed to maintain minimal gas levels because of the damage a total shut down would inflict on heavy industries in the region, Bezzara said.
Venalum, for instance, would take up to two years to restart if it ever shut down completely, he said.
That's because the company is currently operating 905 production cells, and a restart would have to be done at a maximum rate of two per day, he said.
The aluminum producers will likely be the last to suffer if there is a complete gas shut down because they don't use as much gas as do some of the other industries in the region, Bezzara said.
Venalum needs only about 6 million cubic feet per day of gas, Alcasa needs about 5 million cfpd, while Bauxilum needs about 50 million cfpd. Steel producer Sidor needs about 200 million cfpd, he said.
Japan's Showa Denko holds 7% in CVG-Venalum, Kobe Steel Ltd. (J.KOB) and Sumitomo Chemical Co. Ltd. (J.SUC) each hold 4%, Mitsubishi Materials Corp. (J.MMT) holds 3%, and Mitsubishi Aluminum Co. and Marubeni Corp. (J.MRB) each have 1%.
Venezuela Venalum-2: To Name $600M Contract Winner Jan 10
Venalum will name on Jan. 10 the company selected for a $600 million construction contract to build a fifth production line, the government's Venpres news agency reported.
French aluminum producer Pechiney SA (PY), Switzerland-based Glencore International (Z.GNC) and a Venezuelan-U.S. group named ACV-Fluor Daniels have submitted indications of interest in the deal, state mining and heavy industry holding company Corporacion Venezolana de Guayana, or CVG, has said.
The fifth line should add 200,000 metric tons in annual production capacity, approximately doubling current capacity in the first four lines, according to CVG information.
Venezuela is looking for so-called "strategic partners" to invest in sectors ranging from gold and diamond mining to iron, steel and aluminum production.
The first such deal was signed in 2001 by Pechiney which agreed to invest $208 million without retaining any equity in Bauxilum. Pechiney is being repaid its investment over a few years in the form of cheap Bauxilum-produced alumina.
Opposition leaders have said they won't lift the strike until President Hugo Chavez agrees to call elections in 30 days if he loses a Feb. 2 nonbinding vote on whether he should remain president.
Chavez has thus far maintained the constitution only requires him to accept the results of a possible recall referendum next August, the midpoint of his term.
Chavez's critics blame his left-leaning policies for country's deepening economic crisis with a likely 8% contraction in 2002, amid 17% unemployment, and 31% annualized inflation sparked by a 46% devaluation of the bolivar ($1=VEB1403).
Chavez has said the problems are due to an "economic coup" led by his opponents.
CVG Website: www.cvg.com