Alcoa: budget can handle Brazil Alumar cost rise http://today.reuters.com/news/articleinvesting.aspx?type=companyNews&storyid=221589+14-Feb-2007+RTRS
Wed Feb 14, 2007
RIO DE JANEIRO, Feb 14 (Reuters) - Alcoa Inc.'s (AA.N: Quote, Profile , Research) investment in Brazil's Alumar alumina refinery expansion will remain within the company's budget, despite cost increases, an Alcoa spokesman said on Wednesday.
Alcoa and its trading arm, Abalco, have a 54 percent stake in Alumar, BHP Billiton Ltd. (BHP.AX: Quote, Profile , Research) (BLT.L: Quote, Profile , Research) has 36 percent and Canada's Alcan Inc. (AL.TO: Quote, Profile , Research) (AL.N: Quote, Profile , Research) 10 percent.
"There will be some cost increases (at the Alumar expansion)," Pittsburgh-based director of corporate communications, Kevin Lowery, told Reuters by telephone.
"But this will continue to be within our overall capital investment plans for this year, which involves a global budget of more than $3 billion," he added.
Lowery said that, due to the expected cost increases, he preferred not to give a precise investment figure for the 2.1-million-tonnes-a-year capacity expansion at the Sao Luis, Maranhao state, alumina refinery.
BHP Billiton recently estimated that refinery expansion costs could soar 40 percent above initial estimates.
"Different companies use different costs models and different people have different views (on costs)," Lowery said.
The Alcoa spokesman confirmed that mechanical completion of the refinery expansion continues on schedule for 2008, after which ramp-up of the facilities will occur.
The starting date of full commercial production at the expansion has not yet been announced, he added.
Lowery declined to comment on market talk that Alcoa may be a takeover target.
The Times of London said that mining giants BHP Billiton and Rio Tinto Ltd. (RIO.AX: Quote, Profile , Research)(RIO.L: Quote, Profile , Research) have drawn up separate plans for a $40 billion acquisition of Alcoa, whose stock is among the 30 that make up the Dow Jones industrial average.
But a source close to the matter said on Tuesday BHP Billiton was not working on a bid.
At 1645 GMT, Alcoa's shares were down 0.25 percent at $34.75 on the New York Stock Exchange, following a 6.4 percent gain on Tuesday, the stock's biggest percentage gain since November 2002.
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