| NEW YORK
NEW YORK Jan 27 A small Canadian aluminum
producer is in talks to take over Rio Tinto Alcan's
aluminum casthouse in Shawinigan, Quebec, rescuing the
plant from closure at the end of this year, the fund's project
leader told Reuters on Monday.
Sotrem, a company based in Saguenay, Quebec, that makes
aluminum foundry alloys and deox, a type of aluminum used to
remove oxygen in steel production, is leading the deal to buy
the plant, said Yvon D'Anjou, who is in charge of the project.
"We expect to come to a consensus in the next few months,"
He is familiar with the plant, having worked as head of
business development at Alcan until 2008, he said.
A spokesman for Rio Tinto confirmed in an email that the
company has entered exclusive negotiations for the sale of the
casthouse, but did not give any further details.
Under a plan drawn up by Sotrem, the casthouse would produce
35,000-40,000 tonnes per year of small-diameter extrusion
billet, a niche product used to make gas cylinders and scuba
diving tanks, D'Anjou said.
That capacity could increase to 60,000 tonnes in the next
two years if there was demand.
The smelter on site, which Alcan shut towards the end of
last year, is not included in the deal, he said.
Financial terms are still being hammered out. Sotrem will
also look into securing possible government financial help and
expects to invest, "a few million dollars over the next few
years," D'Anjou said.
Sotrem is owned by Pluri-Capital, an investment fund
headquartered in Jonquiere, Quebec.
The new owners would employ about 50 people, slightly less
than the current 60-strong workforce at the casthouse.
The fund is negotiating with Alcan to secure long-term
supplies of aluminum for the casthouse from Alcan's other
Canadian smelters, he said.
The closure of the primary smelter comes as aluminum
producers are under pressure to cut expenses as prices on the
London Metal Exchange languish close to or below costs
because of a big global surplus.
Rio Tinto, one of the world's top mining companies, has sold
or idled numerous underperforming aluminum assets, following
its $38 billion takeover of Alcan in 2007.
Environmental regulations also helped force the closure of
the Shawinigan primary smelter, which produced about 100,000
tonnes per year using Soderberg technology, which is considered
less energy efficient than newer methods of smelting aluminum.