Alcoa Australia alumina supply disrupted by explosion

Gas cutoff also impacts other mineral operations

by Tom Stundza -- Purchasing, 6/11/2008 11:48:00 AM

As a result of an explosion at Apache Energy's Varanus Island facility, and the disruption of natural gas supply to its Western Australia facilities, Alcoa of Australia notified customers Tuesday that it was declaring force majeure under its alumina supply contracts. An Associated Press report describes force majeure as a contractual clause absolving a supplier for delivery delays beyond its control and it may continue for as long as two months.

The extent of the impact upon Alcoa’s customers who use alumina to make aluminum and produce abrasives, refractories, ceramics, and electrical insulation is yet to be determined since it still is still receiving some natural gas from its other supplier. So, the full extent to which alumina production will be affected is uncertain. Alcoa of Australia is part of Alcoa World Alumina and Chemicals which is 60% owned by Alcoa and 40% owned by Alumina Ltd. of Australia.

The Reuters News Service this morning reports that the gas explosion actually has cut supplies to the country's key mining area and it may be two months or more before gas supply is fully restored. The state supplies about a third of the world's iron ore, 20% of the gold and tens of thousands of tons of copper, nickel, zinc, lead and other industrial staples. It is home to 1,030 operating mines producing over 50 different minerals.