Lower profits for Alcoa

Despite continued weak aluminum demand, especially in the aerospace and automotive sectors, Alcoa, the world’s largest aluminum producer, posted a surprisingly strong second-quarter net income of US$216 million (US26 per share), down from last year’s profit of US$232 million (US27). Sales revenues were actually up 5.9% to $5.46 billion. “We demonstrated an ability to improve profitability [compared with the first quarter] in what is still a challenging climate by any measure,” says Alcoa Chairman Alain Belda. “While we have not seen signs of market improvements, we are well-positioned to reap the benefits of any upturn.” Alcoa proved to be the most active mining stock in the U.S., rising 31 to US$25.81.

Alcoa’s French aluminum rival, Pechiney, was the star performer of the New York Stock Exchange, with its American depositary receipts exploding $7.45, or 42.3%, to US$25.05 in response to a hostile takeover bid by Canada’s Alcan, the world’s number-two aluminum company.

Powering ahead US$1.55 to US$31.47, CVRD cut a deal with Japanese-based JFE Steel Corp., allowing the latter to lift its stake in Minas de Serra Geral to 50% from 24.5%, making it a 50-50 joint venture between the two companies. Serra Geral has been mining iron ore from the Capanema mine in Minas Gerais state since 1982, and plans call for development of a US$47-million mine nearby as Capanema is depleted. JFE Steel also signed a contract to buy 2 million tonnes of iron ore per year from the joint venture for 12 years.