* Eyes stake in mine, refinery to meet materials demand
* India likely target for JV, equity swap
* Alba plans $2.5 bln expansion
* Gas input costs held at $2.25 mmBtu by govt
* 2013 profit in line with 2012 on steady aluminium prices
By David French
MANAMA, March 6 (Reuters) - Aluminium Bahrain
(Alba), owner of the world's fourth-largest aluminium smelter,
wants to take a stake in a mine or refinery as its impending
expansion increases its demand for raw materials, its chief
executive told Reuters.
The firm has begun feasibility work on a $2.5 billion sixth
production line which will increase annual capacity by 400,000
tonnes, when it comes online at the end of 2015, from its
current production of 890,000 tonnes a year.
Given the additional demand for raw materials the new line
will create, a focus on securing supplies at source instead of
buying everything on the open market, becomes more important,
Chief Executive Officer Tim Murray told Reuters on the sidelines
of a conference in the capital Manama.
"For line six, it would probably be an interesting
opportunity to look for maybe a joint venture partner or an
equity swap," said Murray, who was promoted from chief finance
and supply officer in October.
Murray added the firm may take a small stake in either a
bauxite mine or a new or existing refinery, with India among
likely options given its proximity to the Gulf Arab region in
comparison with other candidates like Guinea.
Such decisions will form part of the expansion's feasibility
study, which Bechtel Canada was appointed to undertake in
December and which is due to be completed in the third quarter.
Much of the funding for the expansion will be raised from
export credit agencies and both commercial and Islamic banks,
with a bond also part of the package, Murray said, adding the
firm was currently securing a credit rating.
However, Alba has no plans to raise further corporate debt
after securing bank loans in December to pay off a $169 million
bond due to mature this month.
BNP Paribas is financial adviser on the line six
Alba expects 2013 profit to be in line with last year after
its energy costs were held at 2012 levels and the forecast for
aluminium prices remains steady.
The firm has verbal confirmation from the country's
state-run energy supplier that it will pay $2.25 per million
British thermal units (mmBtu) for gas this year, Murray said.
Energy is a significant proportion of the cost of producing
aluminium, with a $0.75 per mmBtu hike at the beginning of 2012
contributing to a 54.4-percent slump in net profit last year.
The main dent in last year's profit level came from a
16-percent drop in the average aluminium cash prices at the
London Metal Exchange to $2,019 per tonne from $2,398 a tonne in
Murray said the company would like to see higher LME cash
prices but it was expecting them to average between $2,000 and
$2,100 per tonne in 2013.
"The LME prices are not where we'd like it - we hope that
will pick up - but if you look into the future, the demand of
the metal itself is very good, with 5 percent annual growth a
realistic figure," Murray said, adding Alba hoped production
would be 900,000 tonnes this year, up 10,000 tonnes on 2012.