Kaiser: Logical to Expand Alpart Now - Jamaica

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Friday, May 25, 2001
Houston-based Kaiser Aluminum (NYSE: KLU) can press on with a 17% capacity increase to 1.7Mtpy at its 65%-owned Alpart alumina refinery in Jamaica because "a series of distractions" are now behind it, spokesperson Scott Lamb told BNamericas.com. They included a two-year labor dispute in the US, a fatal explosion at its Gramercy alumina refinery in Louisiana and earlier uncertainty over power costs in the Pacific Northwest.

The dispute is over, Gramercy is nearing its expanded 1.25Mtpy capacity rate and high costs seem set to remain for some time in the Pacific Northwest, "so now is the logical time to start implementing our performance improvement initiative," he said.

Kaiser is drawing on the lessons learned from lean manufacturing policies used in its US fabrication business and applying them to the commodities division, which covers its bauxite-to-primary aluminum operations.

This week's announcement that the company is reviving the expansion plan follows a six-week, detailed engineering investigation into a complete production-process overhaul and the overcoming of bottlenecks at Alpart designed to lead to the capacity increase. The improvements will be carried out on existing plant with no new major items of equipment envisaged, Lamb said.

The new production rate should kick in late 2002 or early 2003, increasing Kaiser's share of alumina by more than 160,000t and boosting operating income by US$5-15mn, depending on raw material prices. Kaiser expects to achieve the increases at Alpart, and its other operations, within its current US$60-80mnpy capex budget.

The changes also involve reducing inventories and cutting costs generally. Though the company's bauxite mine in Jamaica will be included in the new policy, it is unlikely to be affected greatly, Lamb said. Kaiser, the operator, owns it in partnership with the Jamaican government.