London, 13 October 2010

The global aluminium market is buoyant, demand will remain brisk and prices are likely to average $2,300-2,400 a tonne in 2011, Dutch-based aluminium producer Vimetco said on Tuesday.

"We've seen big demand in the second half of 2010 and we expect further strong growth in demand worldwide. We could sell more than we have available," Frank Mueller, Vimetco's chief executive, told Reuters in an interview.

"The price now is a good price for aluminium, we see it averaging $2,300-2,400 next year, it's justified by the fundamentals," he added.

The London Metal Exchange ( LME) price was last indicated at around $2,430 a tonne. Vimetco is a vertically-integrated producer, owning a bauxite mine in Sierra Leone, along with an alumina refinery, aluminium smelter and rolling mill in Romania.

It has the capacity to produce just over 1.0 million tonnes per year (tpy) of primary aluminium. But this will rise to 1.115 million tpy next year with the completion of an expansion in China, which will take smelter capacity there to 850,000 tpy.

"We're very focused on downstream, looking to increase output of added value products," Mueller said. As part of this Vimetco plans to boost capacity at its Alro rolling mill in Romania to 120,000 tonnes by 2015 from 40,000 tonnes.

The 265,000 tpy Romanian smelter is operating at a reduced rate and is expected to produce 206,000 tonnes in 2010.

Mueller said the plant had an electricity contract until 2018, which related to a continued production volume of 206,000 tonnes.

The Tulcea alumina refinery in Romania is running below capacity for technical reasons, because at full capacity the plant would need maintenance and cleaning, Mueller said.

ENERGY

One of the greatest difficulties facing the aluminium industry was the cost of electricity for such an energy-intensive industry.

"If it becomes too expensive it's not good for aluminium buyers. They will start to look for alternative materials like wood, plastic or steel," Mueller said. When asked about physically-backed exchange traded products for aluminium, Mueller said he thought they could support the aluminium price in the short term.

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