Alumina says demand staying firm

Aluminium producer Alumina Ltd says demand for its metals is staying robust and it expects prices to remain firm.

Alumina chairman Donald Morley said the aluminium and alumina producer was looking forward to the fiscal 2007 year with confidence.

"Demand for alumina and aluminium is robust," Mr Morley told shareholders at the company's annual general meeting in Melbourne.

Mr Morley noted that London Metals Exchange aluminium prices had risen strongly over the last few years, including a six per cent rise this year.

"In the near term, on the basis of forecast supply and demand, prices are expected to remain firm," he said.

Mr Morley said developing countries, such as China, India, were dramatically increasing worldwide demand for metals, including aluminium, as they undergo industrialisation, urbanisation and large-scale infrastructure development.

Global aluminium demand has grown by 5.6 per cent per annum since 2000, compared with about 2.5 per cent per annum in the previous two decades.

"The world's developing economies now comprise 48 per cent of world gross domestic product, compared with 42 per cent a decade ago and are growing strongly," he said.

"These factors have resulted in an acceleration in the rate of growth of demand for aluminium and alumina.

"We believe this growth will continue well beyond this decade."

Mr Morley said that long term, alumina and aluminium prices would be influenced by higher capital costs of constructing new facilities, operating costs, bauxite availability, and the positive outlook for supply and demand.

"These factors support our positive outlook for long-term alumina and aluminium prices," he said.

Alumina's main asset is its 40 per cent interest in Alcoa World Alumina and Chemical (AWAC), which produces smelter-grade aluminium feedstock and aluminium from two smelters in Australia.

Chief executive John Marlay said Alumina was well positioned to benefit from growing demand for aluminium.

Worldwide consumption of aluminium is forecast to double between 2005 and 2020.

"AWAC is well positioned to benefit from this outlook by adding new production capacity, principally through brownfield capacity expansion of its alumina refineries," he said.

Alumina reported a 62 per cent lift in annual net profit to $511 million for 2006.

Alumina's shares closed up 11 cents at $7.31