Saving Iceland

III. Corporate Control

“Historically, the main agents of the mining developments in the Third

World in general and Africa in particular have been private companies from

the major capitalist countries, even though they were constantly supported

by their respective states. Mineral specialization in the Third World thus

developed within the framework of an international extension of the

oligopolistic structure of the advanced capitalist economies of Western

Europe and North America,” observed Samir Amin of The United Nations

University in 1988. (Samir Amin, “Mining in Africa today – Strategies and

prospects,” The United Nations University, 1988)

Six companies — Alcoa, Kaiser, Reynolds of the U.S., Alcan of Canada,

Pechiney of France, and Alusuisse of Switzerland — long dominated the

aluminum production cycle. These six majors controlled half of the bauxite

mining, two-third of the alumina refining, and seven-tenths of the aluminum

smelting operations of the capitalist world in 1988. (Amin)

Compared to other industries, notes the Financial Times, the aluminum

industry has an “unusual structure, with many of the larger companies

vertically integrated — operating right through the production chain,

starting with digging up the bauxite and finishihng by producing metal…”

(Gillian O’Connor, “Hyperactivity in a strong market,” Financial Times,

2000 on FT.com website)

In the year 2000, merger-mania struck the aluminum corporate sector,

reinvoking historic fears of monopolism.

When aluminum production developed in the late 1800s, two companies —

Alcoa and Pechiney — dominated the industry. The firms controlled patents

on Bayer technology for alumina refining and Hall-Heroult technology for

aluminum smelting. (Amin) Alcoa also controlled patents on bauxite mining

and hydroelectric technologies (www.endgame.org). “A long period of

technological monopoly enabled these enterprises to acquire hydroelectric

facilities and bauxite deposits while increasing their production scale.

When their monopoly of the technology ended, they found themselves in a

position of economic monopoly, based on increasing returns to scale,” wrote

Amin.

Alcoa’s monopolistic grip in the U.S. loosened a bit by the second World

War. In 1945, a U.S. appeals court declared the corporation to be a

monopoly, and forced it to spin off its Canadian sister, the Aluminium

Company of Canada (Alcan). The courts also ordered the sale of smelters

that the government built during the war, using Alcoa technology, at a low

price to Reynolds and Kaiser. (www.endgame.org/primer-history.html;

www.clt.astate.edu/crbrown/alcoa.htm; “Alcoa’s actions may catch Justice’s

eye,” Purchasing Online, Oct. 10, 1999)

Now, Reynolds, the third largest producer, has returned to the Alcan fold.

(see below) Also in 2000, the second largest producer — Alcan — attempted

to merge with the fifth and 14th largest firms, Pechiney and algroup (a

division of Alusuisse Lonza). Pechiney withdrew from the proposed combine

early in the year. This reduced the conglomeration’s rise against the new

Alcoa/Reynolds force.

Alcoa now hold over 4.7 million tons of aluminum production capacity

dwarfing Alcan’s 1.9 million. The third largest transnational producer,

Billiton, holds 0.9 million in poroduction capacity. (Financial Times,

“Aluminum/Current Trends,” on FT.com)

As in the primary aluminum sector, Alcoa, Alcan, and Billiton dominate the

alumina refining component of the industry. Last year, Billiton gained

Reynolds’ majority hold on the massive Worsley refinery in western

Australia. The U.S. Dept. of Justice mandated this sale in the resolution

of its anti-trust complaint against Alcoa and Reynolds’ merger.

Revneues are up for the biggest producers. Billiton earned $577 million in

the fiscal year ending June 30, 2000, up 51 percent from the previous year.

(Commerzbank Securities, “Billiton company report,” August 30, 2000) In the

first three quarters of 2000, Alcoa’s earnings rose 65% from 1999. Income

rose from $853 million to $1.3 billion. (Alcoa 8-Q, FY1999)

The largest companies, reported the Financial Times, benefit from vertical

integration that enhances their ability to stablize prices and dictate

growth. “Although concerted action by the industry is anathema to

competition authorities, particularly in the US, self interest means that

some of the larger companies have been willing to act as ‘swing producers’:

cutting output when prices are falling, increasing it when they are

rising,” the FT reported in 2000. “Some smelters that were mothballed in

the 1990s remain out of action… But the existence of those mothballed

smelters puts an effective cap on prices. Meanwhile, capacity is being

steadily increased, in line with growth expectations.” (Gillian O’Connor,

“Hyperactivity in a strong market,” Financial Times, 2000 on FT.com

website)

Table. Transnational Giants

Corporate aluminum production in 1999

(metric tons per year)

Company Capacity Primary production

Alcoa/Reynolds 4,256,000 3,800,000

Alcan/Alusuisse 1,372,000 1,744,000

Billiton 886,000 890,000

Pechiney 828,000 827,000

Hydro 745,000 749,000

Comalco 659,000 654,000

Aluminum Bahrain 537,000 515,000

CVG (Venezuela) 520,000 482,000

Kaiser 510,000 413,000

Dubal 424,000 433,000

VAW 421,000 421,000

Ormet 256,000 256,000

Source: CRU International, as reported in “Who’s Who: Mergers, takeovers in

high summer,” Financial Times at FT.com website.

Some less traditional transnational corporations have assumed significant

roles in the aluminum production cycle:

* Marc Rich, the former U.S. citizen and tax evader pardoned by President

Bill Clinton (known to some as “Aluminium Finger”), has invested in an

Iranian smelter, traded in aluminum exports from Russia, owned alumina

refineries in the Caribbean, and is hoping to benefit from a World

Bank-backed bauxite/alumina complex sale in Guinea.

* xxxxx

#1 Alcoa (including Reynolds)

ALCOA INC.

(a/k/a Aluminum Company of America)

201 Isabella Street

Pittsburgh, PA 15219

1999 revenues: >$16 billion

Chairman, President, and CEO

Alain J. P. Belda

www.alcoa.com

REYNOLDS METALS COMPANY

6601 West Broad Street

P.O. Box 27003

Richmond, VA 23261

1999 revenues: >$4.6 billion

In 1886, an Ohio chemist named Charles Martin Hall discovered the process

of electrolyzing alumina into aluminum, the same year that Paul Heroult

made the same discovery in France. In 1888, Hall, with backing from the

Mellon Bank, helped to found the Pittsburgh Reduction Company and built a

pilot plant and soon launched a global and revolutionary expansion. In

1907, the company name was changed to the Aluminum Company of America.

(“Biography, Charles Martin Hall,” on Oberlin College Archives website,

www.oberlin.edu/~archive/WWW_files/hall_cm_b.html. Oberlin maintains many

of Hall’s records, including extensive filings from lawsuits, from this

early era of the aluminum industry.)

The company maintained a monopolistic position in the industry through

World War II, after which the U.S. government ordered the company to sell

several smelters and sever its ties to Alcan.

In 1943, George Seldes wrote in Facts & Fascism (published by In Fact) that

“By its cartel agreement with I.G. Farben, controlled by Hitler, Alcoa

sabotaged the aluminum program of the U.S. air force. The Truman Committee

[on National Defense, chaired by then-Senator Harry S. Truman in 1942]

heard testimony that Alcoa’s representative, A.H. Bunker… prevented work

on our $600,000,000 aluminum expansion program.

“Thurman Arnold, as assistant district attorney of the United States, his

assistant, Norman Littell, and several Congressional investigations, have

produced incontrovertible evidence that some of our biggest monopolies

entered into secret agreements with the Nazi cartels and divided the world

up among them. Most notorious of all was Alcoa, the Mellon-Davis-Duke

monopoly which is largely responsible for the fact America did not have the

aluminum with which to build airplanes before and after Pearl Harbor, while

Germany had an unlimited supply.”

“If America loses this war,” said Secretary of the Interior Harold Ickes in

1941, “it can thank the Aluminum Corporation of America.” (George Seldes,

Facts & Fascism (In Fact, 1943), pp. 68, 140-144.

Alcoa Inc. remains the world’s largest producer of alumina and aluminum,

positions that it solidified with the acquisiton of Reynolds Metals in

2000. Reynolds was the third largest aluminum producer in the world, and

the biggest aluminum foil maker. (Reynolds Metals Co., Form 10-K (FY1999),

annual report to Securities and Exchange Commission, March 3, 2000)

More than half of Alcoa’s revenues are generated in the United States

($10.4 billion of $16.2 billion in 1999) (Alcoa Inc., Form 10-K (Fiscal

Year 1999) filed with Securities and Exchange Commssion, Feb. 28, 2000)

On August 18, 1999, Alcoa announced plans to acquire Reynolds Metals

Company (Richmond, Va.), in a $5 billion stock purchase. Reynolds was the

second largest aluminum company in the United States, and third largest in

the world. The U.S. Department of Justice forced Alcoa to sell off

Reynold’s alumina refinery stakes before allowing the merger to conclude in

May 2000.

The Justice Dept. charged that the merger “threatens substantial and

serious harm to (alumina) consumers.” It asserted that it “will

substantially lessen competition in the refining and sale (of alumina)….

substantially increases the likelihood that Alcoa can unilaterally control

prices and also increases the likelihood that the remaining (alumina)

producers will be able to coordinate to raise prices, harming consumers. As

a result of the proposed merger, higher prices are likely for aluminum and

other products containing alumina.” (United States of America, Department

of Justice, Antitrust Division v. Alcoa Inc. and Reynolds Metals Company,

complaint, May 3, 2000)

In its May 3, 2000, settlement with the Justice Department, Alcoa agreed to

sell Reynolds’ stakes in alumina refineries in Worsley, Australia (56

percent stake); Stade, Germany (50%); and Sherwin, Texas (100%). It also

agreed to sell one-quarter of Reynolds’ interest in an aluminum smelter in

Longview, Washington. On Aug. 29, 2000, Billiton plc agreed to purchase

Alcoa/Reynolds’ 56% stake in the Worsley alumina refinery for $1.49

billion. (Alcoa, Form 10-Q, submitted to U.S. Securities and Exchange

Commission, Oct. 20, 2000)

Alcoa’s latest merger follows its $3.8 billion takeover of Alumax in 1998.

Alumax was a joint venture between Amax, Mitsui and Nippon Steel. During

the Alumax merger, the Justice Dept. forced Alcoa to sell its aluminum cast

plate operations. The two companies, before the merger, controlled 90

percent of the global market for the manufacture and sale of cast plate.

(U.S. Dept. of Justice, “Justice Department clears Alcoa’s proposed

acqusition of Alumax after Alcoa agrees to sell its cast plate operations,”

press release, June 15, 1998; Roger Moody, “Gulliver PUK

(Pechiney-Ugine-Kuhlmann) Dossier” in The Gulliver File – Mines, people and

land: a global battleground, Minewatch, 1992.)

In 1999, Alcoa objected to a U.S. Court of Appeals (Eleventh District)

affirmation of a decision that Alumax owed $411 million in taxes, including

interest, from fiscal years 1984-1986. (Alcoa 10-K, FY1999)

Also in 1999, the DOJ forced Alcoa to sell one of two aluminum sheet

manufucturing plants that it obtained in its $41 million takover of Golden

Aluminum Company from ACX Technologies Inc. (Department of Justice,

“Justice Department requires divestiture in Alcoa’s Acquisition of Golden

Aluminum Company,” press release, Nov. 5, 1999)

With the Alumax merger, Alcoa’s U.S. aluminum smelting capacity surged

from a 31 percent national share (1.3 million metric tons) to 46 percent

(1.9 million). The addition of Reynolds’ capacity gives Alcoa a 57 percent

share (2.4 million) of U.S. production capacity. Including Reynolds’

Canadian operations, Alcoa now holds more capacity (3.3 million tons) in

North America than exists in Russia. (“Alcoa’s actions may catch Justice’s

eye,” Purchasing Online, Oct. 10, 1999)

– Alcoa and Bush

In late December 2000, President-elect George W. Bush added Alcoa chairman

Paul H. O’Neill to his stable of corporate cabinet members. He nominated

O’Neill to be the new Treasury Secretary. O’Neill, a former International

Paper president, became an Alcoa director in 1986, and chaired the

company’s board from 1987 to 2000. (Brian Knowlton, “Alcoa Chief Picked to

Head Treasury,” International Herald Tribune, Dec. 21, 2000; Alcoa 10-K,

FY1999)

Alcoa operates a smelter in Rockdale, Texas. It also plans to strip mine

15,000 acres in two Central Texas counties for fueling the Rockdale

smelter. Bush, as governor of Texas, was criticized by environmentalists

and neighbors of Alcoa’s central Texas lignite strip mines for not opposing

Alcoa’s plans to stripmine their land and ship massive amounts of

underlying groundwater to San Antonio (see Human Rights chapter)

“We hope that Gov. Bush will recognize our struggle against Alcoa is the

perfect opportunity for him to demonstrate his willingness to protect the

rights of Texans against the wrongs of a few rich, corporate giants,” said

Travis Brown of Neighbors for Neighbors, a local group of concerned

citizens. (Peggy Fikac, Express-News (Texas), Oct. 19, 1999)

No such luck. Bush punted all responsibility for the decision to the Texas

Railroad Commission.

On the environment, O’Neill has said, “I don’t see environmental issues as

a negative for aluminium or Alcoa, they are our friend. As long as

legislatures and governing bodies don’t do stupid things, we’ll be fine.”

(Aluminium Today, 1999. [xxx need citation xxx])

On workers’ health in Mexico, he has said “our plants are so clean they can

eat off the floor.” The New York Times recently reported on conditions at

Alcoa’s factory in Ciudad Acuna, Mexico. The article describes the working

conditions; employees earning $6 a day, being limited to three sheets of

toilet paper per work, and collapsing from gas leaks.In 1993, 179 workers

were hospitalized by a gas leak. Half of the city’s 150,000 residents use

backyard latrines. Alcoa opened the auto parts plant in Acuna after the

signing of the North American Free Trade Agreement, sifting production from

San Antonio, Texas. (Sarah Anderson and John Cavanagh, Institute for Policy

Studies (U.S.), Karen Hansen-Kuhn, The Development GAP (U.S.). and Carlos

Heredia and Mary Purcell, Equipo PUEBLO (Mexico), “No Laughter in NAFTA:

Mexico and the United States Two Years After,” 1996)

#2 Alcan/algroup

Alcan

1188 Sherbrooke St. West

Montreal, Quebec H3A 3G2, Canada Phone: 514-848-8000

Fax: 514-848-8115

http://www.alcan.com

Alcan Chairman

John R. Evans

Interim President and CEO

Bill Blundell

algroup (former division of Alusuisse Lonza)

Feldeggstrasse 4, Postfach 495

Zurich CH-8034, Switzerland Phone: +41-(0)1-386-22-22

Fax: +41-(0)1-386-25-85

http://www.algroup.ch:

Chairman Martin Ebner

CEO and Managing Director Sergio Marchionne

Alcan/algroup combined 1999 revenues: $12.3 billion

In 1902, Alcan opened as a Montreal, Canada,-based subsidiary of the

Pittsburgh Reduction Company (renamed Alcoa in 1907). It established its

first smelter and hydroelectric power plant in Shawinigan, Quebec. In

1928, Alcan began to splinter from Alcoa. During World War II, Alan opened

numerous new plants in Quebec, and in the 1950s, opened a plant in British,

Columbia. Later, it opened operations outside Canada. (Alcan 10-K, FY1999)

A three-way merger between Alcan, Pechiney, and algroup (the aluminum

divsiion of Alusuisse Lonza) fell apart in early 2000. Facing obstacles

from the European Union and the U.S. DOJ, in April 2000, the “A.P.A.”

partners announced that Pechiney would wiithdraw from the three-way merger.

They decided that “divestments which would ultimately be required to meet

the objections of the European Commission would seriously undermine the

strategic viability of the combined company’s rolled products business in

Europe.” (Alcan-Pechiney-Algroup, “Merger will not proceed,” joint press

release, April 13, 2000; also, Plunkert, 2000)

On Oct. 18, 2000, Alcan completed its merger with the Alusuisse Lonza’s

algroup division. The algroup shareholders gained a 34 percent share in

Alcan. (Alcan press release, Oct. 18, 2000)

Alcan describes itself as “one of the most international aluminum companies

in the world.” (Alcan press release, Aug. 21, 2000) The company’s global

operations include:

* Bauxite mining: full or majjority stakes in Jamaican, Australian,

Brazilian, Ghanaian, and Indian mining companies, and minority shares in

Guinean (CBG) and Brazilian (MRN) producers.

* Alumina refineries: full stakes in Brazil (Ouro Preto in Sramenha, Minas

Gerais) and Canada (Vaudreuil in Jonquiere, Quebec); majority stakes in

India (Belguam in Karnataka and Muri in Bihar) and Jamaica (Kirkvine and

Ewarton); and minority stakes in Australia (Gladstone) and Brazil (Alumar).

* Full stakes in seven Canadian smelters with a combined capacity of 1.1

million tons; two small Brazilian smelters, three small U.K. smelters, and

a small U.S. smelter, and majority stakes in two small Indian smelters.

Alcan’s share of smelting capacity outside of Canada totals 515,000 tons.

(Alcoa 10-K, FY1999)

Alcan’s global operations include the Indian Aluminium Company (Indalco),

Alusuisse has numerous operatrions beyond aluminum production, including

pharmaceutical and cosmetics packaging (through its Wheaton subsidiary) and

food and tobacco packaging (through its Lawson Mardon subsidiary).

#3 – Billiton

Billiton Plc

1-3 Strand

London

WC2N 5HA

United Kingdom

Tel: 44 (0) 20 7747-3800

Fax: 44 (0) 20 7747-3900

Web: www.billiton.com

Revenues in 1999: $4.6 billion

CEO/Chairman: Brian P. Gilberton

In 1860, Billiton adopted articles of association in The Hague. The company

took its name from an island, also spelled Belitung, in the Dutch colony

that became Indonesia. In 1861, the company shipped laborers from China to

the island between Sumatra and Borneo and started digging its first

concession: a tin reserve. Billiton shipped the tin, and lead, to its

smelters in the Netherlands. (“History of Billiton,” from www.billiton.com;

“Dutch imperialism, ” from www.gimonca.com/sejarah/sejarah05.html)

The Royal Dutch/Shell Group bought Billiton in 1970. In 1994, Gencor of

South Africa bought a majority stake in the company from Royal Dutch/Shell.

In 1997, the non-precious metals assets of Gencor and the minerals

businesses of Royal/Dutch Shell spun off into an independent Billiton that

is now based in London. (“Billiton Plc, Hoover’s Company Profile Database –

World Companies 2000; “History of Billiton”)

The company moved into the bauxite mining business in the 1940s, when it

began mining bauxite in Indonesia and Surinam. It no longer mines bauxite

in Indonesia, but continues to do so in Surinam, where it runs a bauxite

mine and holds a 45% interest in an alumina refinery.

The company’s aluminum interest span the globe. In October 2000, Billiton

took control of Reynolds alumina refinery in Worsely, Australia, which the

U.S. Dept. of Justice ordered sold in the Alcoa/Reynolds merger. Billiton

now owns an 86% stake in the reinery and nearby bauxite mine in Western

Australia. It also controls the Gove bauxite mine in the Northwest

Territories. (Commerzbank Securities, “Billiton company report,” August 30,

2000)

Billiton also owns interests in mines, refineries and smelters in Brazil,

South Africa, Mozambique, and Australia. It holds a 15% interest in a

Brazilian company, Mineracao Rio do Norte S.A., which runs one of the

world’s largest bauxite mines. It also is a part-owner of the Alumar

alumina refining and aluminum smelting complex in Brazil, and another

Brazilian smelter, Valesul. It owns two aluminum smelters in Richards Bay,

South Africa. Billiton owns 47% of a new smelter that opened in Mozambique

in 2000. Also in 2000, Billiton acquired Reynolds’ share of the massive

Gladstone bauxite mine/alumina refinery complex. The company is bidding to

take-over the state-run Venezuelan aluming company, CVG, for $3 billion.

(“Billiton background” at www.mbendi.co.za/orgs/cegi.htm; “History of

Billiton”; “Billiton scoops giant Australian alumina miner,” Financial

Post, Aug. 30, 2000)

Billiton digs many other minerals. It mines copper and zinc in northern

Quebec, Canada. It operates open pit and underground coal mines in South

Africa through its Ingwe subsidiary. The company mines coal in Australia

and Colombia, and ranks as the world’s leading exporter of thermal coal.

Also in South Africa, the company mines zinc from an open pit, and heavy

mineral sands from the coastline. Billiton subsidiary QNI is one of the

world’s top five nickel and cobalt producers. Its operations in Colombia

and Australia produce 6% of the world’s nickel and 7% of the world’s

cobalt. Its chrome mining operations in South Africa and manganese mining

pits in Australia and South Africa rank as the world’s largest. (“Billiton

background” at www.mbendi.co.za/orgs/cegi.htm; “History of Billiton”;

Hoover’s)

Through the $1.2 billion Rio Algom purchase, Billiton also acquired copper

mining companies in Chile (100% of Cerro Colorado), Argentina (25% of

Alumbrera), and Canada (33.6% of Highland Valley). Rio Algom also holds

development rights to a copper and zinc mining project in Peru and a copper

mining project in Chile. In addition to copper and zinc, Rio Algom

distributes uranium and coking coal. (Commerzbank Securities)

For the past 25 years, residents of the Mole Lake/Crandon region have

fought plans to develop a zinc-copper sulfide mine, citing potential toxic

discharges and groundwater depletion. Ojibwe people from the Mole Lake

Reservation farm nearby rice beds. Billiton acquired this proposed mining

site when it bought Rio Algom in October 2000. (“Nader calls on South

African company Billiton to drop Crandon mine plans in Wisconsin,” press

release, October 30, 2000)

Billiton is exploring the possiblity of mining lead and zinc in LanPing,

China. This mine would be located near a new massive 958 foot-high dam on

the Mekong River. (www.prop1.org/nucnews/2000nn/0008nn/000804nn.htm)

“Billiton is ambitious,” reported Financial Times in 2000. “It has been

keeping a close eye on both Venezuelan privatization prospects and possible

disposals by Brazil’s CVRD.” (“Who’s Who: Mergers, takeovers in high

summer,” Financial Times at FT.com website.)

#4 – Pechiney (France)

Pechiney

Headquarters:

7 Pl. du Chancelier Adenauer

Paris, 75116

Telephone: 33-1-5628-2000

Website: www.pechiney.com

CEO: Jean-Pierre Rodier

1999 revenues: $10.1 billion

Pechiney began producing aluminum in 1860. Its operations now span the

globe.

Aluminum accounted for 31.6% of Pechiney’s net sales in 1999. It produces

bauxite, alumina, primary aluminum, and secondary aluminum in Australia,

Cameroon, Canada, France, Greece, Guinea, and the Netherlands. Relevant

subsidiaries and affiliates include Aluminium Pechiney, Affimet, Alucam,

Aluminerie de Bécancour, Aluminium Dunkerque, Aluminium de Grèce, ECL,

Friguia, Pechiney Nederland, QAL, and Tomago Aluminium. (Pechiney 1999

Annual Report on www.pechiney.com)

Pechiney’s technology, which Heroult pioneed in the 1880s, is used in other

smelters around the world. Nalco in Orissa, India (the largest aluminum

smelter in southern Asia) utilizes Pechiney technology and engineering

servies for its bauxite mining, alumina refining and smelter operations.

(Department of Mines, Government of India, “Mining and Processing: Natioanl

Aluminium Company Ltd.,” chapter in Annual Report 1999-2000; see:

www.nic.in/mines; Rajaram Satapathy, “NALCO expansion plan gets off the

ground,” Times of India, July 3, 2000)

Other major Pechiney product lines include aluminum and steel beverage cans

(it is the world’s largest producer), plastic packaging, and ferroalloys.

Pechiney also invests heavily in uranium mining; for example, in Niger, it

is in a joint venture to mine uranium from the Arlit mine. Arlit hold

estimated reserves of 34,500 tons. The French government, the mine’s

primary customer, subsidizes the mining operation. (“Niger – Mining:

Uranium Mining,” at www.mbendi.co.za/indy/ming/urnm/af/ni/p0005.htm)

Exerpts from…

Roger Moody’s “Gulliver PUK (Pechiney-Ugine-Kuhlmann) Dossier” (published

in 1992)

(Courtesy of The Sustainable Energy and Anti-Uranium Service Inc. Visit

http://www.sea-us.org.au)

“It is hardly surprising that, worldwide, Pechiney (formerly

Pechiney-Ugine-Kuhlmann or PUK) has run into more opposition for its

aluminium operations than its nuclear interests. It is the fourth largest

aluminium producer in the world. It is also France’s only aluminium

producer (2), and the largest in Europe.

“Moreover, when it acquired American National Can for US$1bn in 1988, it

became the world’s largest producer of metal drinks cans.

“Pechiney is owned 75% by French state interests (10% of which is in the

hands of Assurances Generales de France, acquired in 1990. Although plans

to privatise Pechiney were high on the agenda (after the group finished

restructuring in 1986, the French socialist government has so far applied a

brake to both privatisation and nationalisation.

“By 1988, the company saw an upturn in its fortunes, with the saving of two

domestic smelters planned for closure earlier in the decade and

construction of another in Normandy; its nuclear fuels activities proving

“highly profitable”; a JV under discussion with the USSR which would be the

first of its kind; and highly successful returns from its ventures in the

USA, especially Howmet Turbine.

“Pechiney was set up in 1855, began producing aluminium five years later,

and – with a spectacular rise in output prior to WW2 – took over several

companies on the way. In 1971 it merged with Ugine-Kuhlmann.

“Spurred by major losses in its aluminium sector and a downturn in

production of 6% in 1983, Pechiney expanded its two French smelters, but

was squeezing the rest. The same year, it acquired a stake in a

“hypothetical” French nuclear power station in return for cheap power to

run its remaining smelting capacity, drawn from any stations run by

Electricite de France. Under the chairmanship of Georges (“I hate to lose

money”) Besse, the new, beaming, loud-talking, joke-cracking President

Directeur General of the company, Pechiney’s fortunes were beginning to

turn by mid-1984.

“Pechiney’s chemical assets were sold to Elf-Aquitaine, Rhone-Poulenc and

CdF Chemie after Giscard d’Estaing and Mitterand both blocked a potentially

lucrative sale to Occidental Petroleum. The loss-making steel interests

have also been hived off. Cash to finance the huge FFr 3,000,000,000

investment programme was to be found in an agreed sale of the Howmet

Aluminium Corp to Alumax (a JV between Amax, Mitsui and Nippon Steel). In

the event, Howmet remained under Pechiney’s control, with Alumax gaining a

half interest each in Howmet’s Maryland and Washington smelters.

“This half-sale of Howmet’s smelter interests was part of a redeployment of

Pechiney’s North American aluminium operations from the USA to Quebec.

“Environmentalists in New Zealand also fought hard against the siting of a

smelter in the beautiful valley of Aramoana, where Pechiney replaced

Alusuisse as the chief foreign partner in a consortium headed by Fletcher

Challenge and CRA in 1982 (14). But talks over the siting of a power plant

for cheap power broke down (15) and the project was shelved (2).

“Meanwhile the Spanish government was tussling with Pechiney over who would

pick up the bill for losses on the 67%-owned Alugasa aluminium subsidiary

(16), and it finally kicked Pechiney out in 1982 (2).

“Pechiney has a 35% interest (along with Gove Aluminium, 59% controlled by

CSR) in the Tomago smelter in New South Wales which came on stream in late

1983, exporting aluminium to Japan: plans to expand the smelter by 50% were

underway in 1990.

“The construction of the smelter was energetically opposed by local farmers

and environmentalists. The smelter is set in the wine-growing region of

Hunter Valley. A large plant producing 230,000 tonnes of aluminium a year

at about $1000/tonne – its ultimate capacity is more than 700,000 tonnes.

Pechiney is employing a new, secret smelting process, purportedly replete

with environmental controls to remove fluoride, and a new form of waste

containment using “excavated cells” covered in two metres of clay.

“In the Netherlands, Pechiney Nederland opened up a controversial smelter

in Vlissingen. (Passengers escaping from Olau ferries after collisions with

Comurhex nuclear cargoes in the Channel can catch a glimpse of it as they

rush to bright lights of Amsterdam). The smelter was the subject of intense

public debate, and opposition from environmental groups on health and

economic grounds

“Pechiney participates in Friguia, a holding company which has a 51 %

interest in alumina production in Guinea. The Frialco consortium is owned

30% by Pechiney, 30% by Noranda, with Alcan and Hydro Aluminium holding 20%

each. Pechiney also mines bauxite and produces alumina and aluminium in

Greece.

“India got Pechiney’s technical advice in 1980 when it drew up plans for a

bauxite treatment and aluminium complex in Orissa.

“Soon after Bernard Pache took over the helm at Pechiney in 1985 from

Georges Besse (who had graduated into the company from Cogema), he began

soliciting atomic and other business in Japan, hoping to sell the whole

range of Pechiney’s nuclear fuel facilities; fuel for light water reactors,

fabrication of zirconium products (through its Cezus subsidiary), the

production of uranium hexafluoride, and fabrication of fuel elements

themselves.

“Three years later, Uranium Pechiney, together with Cogema and Framatome,

took a 49% share in the US fuel supplier Babcock & Wilcox (B&W Fuel

Company). In 1991, Framatome was negotiating to take control over B&W

Fuel, as well as B&W Nuclear Service Company.

“But its most important nuclear role has probably been as the 50% holder of

Minatome, which – under the 1982 reorganisation – was bought out by

CFP/Total and merged with Total’s subsidiary Total Compagnie Miniere.

“Until 1982, Minatome mined uranium inside France, notably at St

Pierre-de-Cantal, using its 94%-owned subsidiary Scumra and producing

100t/year U3O8. Outside of France, Minatome had shares in uranium mines in

Namibia (10% of Rossing), Niger (6.7% of the Somair consortium at Arlit),

and has been exploring for the deadly metal in the USA, Australia (at Ben

Lomond), Colombia, Brazil, Ireland, Britain and Mauritania, not to mention

Namibia.

“Uranium mining activities undertaken by Pechiney in its own name include

grabbing a share in the lucrative Cluff Lake project, managed by Amok as

the controlling partner in Cluff Mining Ltd; Amok itself is owned as to 25%

by Pechiney. Lower down the line, the wholly-owned subsidiary Uranium

Pechiney took a share in a uranium-from-phosphoric acid recovery plant

operated by Gardinier, planned for the early 1980s but which appears to

have closed by 1982. In Algeria the company was studying uranium reserves

in 1977; a contract that year for a feasibility study was awarded to

Pechiney and Minatome, Sogerem (a Pechiney subsidiary), and Stec.

“Five years later, Uranium Pechiney won a US$32M contract to provide

processing technology, engineering and equipment for

uranium-from-phosphates extraction in Tunisia, after Gardinier and PUK

conducted a feasibility study on the project. The unit was to be built at

Gabes on the Mediterranean coast, but plans for extraction had not

materialised by 1984.

“The company’s most controversial deals have been with South Africa and in

South America. In the late ’70s the French nuclear industry won a large

part of the apartheid republic’s burgeoning nuclear power/weapons

programme. The contract for the first South African nuclear power station

(Koeberg 1) went to a consortium headed by Framatome (controlled by

Creusot-Loire which is itself part of the huge Empain-Schneider group that

controlled Pechiney). At roughly the same time, the South African

government announced an agreement with a consortium headed by PUK,

including Creusot-Loire and Westinghouse, to provide uranium enrichment and

fuel fabrication facilities. This arrangement was superseded with the

development of Nufcor’s own Pelindaba enrichment plant.

“The Argentinian military dictatorship did, however, in the early ’80s

select a consortium headed by PUK to cooperate with the Argentinian CNEA in

opening up the Sierra Pintada uranium deposits. The following year the USA

stopped its own shipments of uranium to Argentina because the military

state refused to sign the Nuclear Non-Proliferation Treaty and, within

another year, the Soviet Union was sending the country 20% enriched

supplies of U-235 in exchange for grain.

“Also, at the beginning of 1981, Pechiney announced it had won a contract

to build Brazil’s first uranium hexafluoride plant for Nuclebras. The

plant, to be constructed at Resende near Rio de Janeiro, would employ

Pechiney’s own technology and start up in 1985, with an initial production

of 450 or 500 tonnes. The deal completed Brazil’s attempts for a decade (in

fact since the West German-Brazilian nuclear pact) to complete the nuclear

fuel chain on its own territory.

“At the same time PUK was assisting Nuclebras to construct the Pocos de

Caldas uranium mining complex, specifically the Otsamu Utsumi mine in Minas

Gerais which officially opened in May 1982, although production started in

December 1981. PUK participated in the actual construction of the mine and

provided technical expertise.

“Although the West German government built Brazil’s uranium enrichment

plant in late 1983, the Brazilian regime asked Alsthom-Atlantique, another

French-state-controlled engineering company, to supply vital compressors

for the plant. The Brazilian Minister of Mines and Energy, Cesar Gais, also

visited France to discuss with Pechiney the possibility of using a new

uranium mining procedure developed by Pechiney.

“Uranium Pechiney developed this process to treat high clay ores and

dispersed clays containing uranium, gold and other materials not previously

economically recoverable. This ‘physico-chemical’ process purportedly

transforms clay into porous granular material ready for solid-liquid

separation.

“It was later reported that both Pechiney and Cogema were trying to

implement a plan to extract uranium and phosphoric acid from openpit ore at

Itataia in Brazil – an “innovative” development since the two are not

chemically bound together. The US$300M project was agreed in April 1984 and

was intended to process up to 20,000 tonnes a day of ore, producing some

2600 tonnes a year uranium, thus making it one of the more important new

uranium ventures.

“The deposit, 200km south-west of Fortelaza in Ceara state, has an

estimated 80,000 tonnes of contained uranium. Pechiney would be responsible

for the project engineering and Cogema for the purchase of any of the

Itataia uranium (46).

“An irony, not lost on anti-nuclear groups concerned with weapons

proliferation, is that both the West German and French governments have

enormously assisted Argentina and Brazil to acquire nuclear weapons

although (one might say because) the two countries, despite a recent

nuclear pact, have long considered the other capable of launching an atomic

attack on “their” soil.

“By the turn of the eighties, Pechiney had established itself as one of the

world’s most important aluminium producers, its most significant

manufacturer of metal cans, and one of the few diversified conglomerates

not to have reduced its commitment to nuclear fuel production and

processing.

“In 1991, it saw its plans to start up a smelter at Nasiriva, in Iraq,

dashed by the horrendous conflict between the Saddam Hussein regime and the

Bush administration for control of Kuwait, and had to shelve plans (formed

with Austria Metall, Alumined Beheer and RTZ) to build the Atlantal smelter

in Iceland.

“In Venezuela, an agreement with Aluminium del Caroni SA, the state-owned

company, to construct a smelter on the Orinoco river, was shelved for

financial reasons. But, in 1990, Pechiney agreed to a new project with

Alisa (Aleaciones Ligeras SA) to operate a Venezuelan smelter, to be

constructed by Davy McKee.

(Above from Roger Moody, “Gulliver PUK (Pechiney-Ugine-Kuhlmann) Dossier”

in The Gulliver File – Mines, people and land: a global battleground,

Minewatch, 1992. Courtesy of The Sustainable Energy and Anti-Uranium

Service Inc. Visit http://www.sea-us.org.au)

#5 – Norsk Hydro (Norway)

Norsk Hydro

Hydro Aluminium Metal Products

Bygd¿y Allé 2

Oslo, 0240

Telephone: 47-22-43-21-00

Fax: +47 22 73 79 30

Website: www.hydro.com

1999 revenues: $13.1 billion

CEO: Egil Myklebust

In 1905, Norsk Hydro ASA opened shop, harnessing hydro-electric power in

Norway for the first industrial-scale nitrogen fertilizer plant in the

world. While Norsk Hydro is still in the “plant nutrition” (ammonia, urea,

and other fertilizers) business, it is now a diversified and global

company, the largest publicly-owned firm in Norway.

The aluminum sector, which it entered in 1967, is a major piece of Norsk

Hydro’s operations. In 1998, Hydro produced 747,000 tons of primary

aluminum, mostly at its four smelters in Norway (Karmøy, Høyanger, Sunndal

and Årdal). Hydro generates its own hydroelectric power for these smelters.

“Energy, in the form of hydroelectric power, natural gas and petroleum, has

been the basis for Hydro’s growth and is the common link among its core

business activities,” reads the company’s 1999 annual report. (Norsk Hydro

ASA, Form 20-F (FY-1999), filed with the United States Securities and

Exchange Commission).

he company also owns a 49.9 percent stake in Sør-Norge Aluminium A/S

(Søral), which operates another smelter in Norway. Hydro is in a

partnership with Goldendale Aluminum in the United States in the production

of 159,000 tons of aluminum per year. It also an collaboration with Talum,

a small Slovenian smelter, and is a 10% investor in Slovalco, a smelter in

Slovakia heavily backed by the European Bank for Reconstruction and

Development (see Banks chapter).

In 2000, Hydro started a 10-year agreement to purchase a total of one

million tons of aluminum from Companhia Vale do Rio Doce’s Albras smelter

in Brazil. The company is studying a possible new 474,000 ton per year

smelter in Trinidad and Tobago. (www.hydro.com)

Hydro’s aluminum business is growing, geographically and fiscally. Hydro

realized 50 percent growth in its light metals sector operating income from

1999 to 2000. (“Preliminary results 2000: Strong growth and record

results,” Norsk Hydro press release, Feb. 12, 2001)

Hydro supplied only 60 percent of its alumina requirements internally, low

compared to giants like Alcoa. It holds a 35 percent interest in the

Alpart, Jamaica, alumina refinery controlled by Kaiser, and a 25 percent

share in the Alunorte refinery consortium in Brazil. These supply a

combined 905,000 tons of alumina to Hydro’s smelters. (Norsk Hydro, Form

20-F)

In a high stakes quest for a captive supply of alumina, Hydro is engaged in

a tense battle with indigenous peoples over its planned joint venture (with

Alcan) to mine and refine bauxite in Orissa, India (see Human Rights

chapter).

Norsk Hydro’s other major corporate segments include oil and gas

exploration and development (mainly on the Norweagian continental shelf,

Canada, Libya, Angola, Russia and soon, Iran), industrial insurance,

pharmaceuticals, and petrochemicals such as polyvinyl chloride. Hydro spun

off its agricultural operations, including the world’s largest fish farming

company, in 2000. (www.hydro.com)

#6 – Rio Tinto / Comalco

Rio Tinto

6 St. James’s Square

London SW1Y 4LD

United Kingdom

Phone: 44 (0) 20 7930 2399

Fax: 44 (0) 20 7930 3249

2000 revenues: $10.0 billion

Website: www.riotinto.com

Chairman: Sir Robert Wilson

Comalco Limited

ACN 004 502 694

Level 25, 12 Creek Street

Brisbane, Queensland 4000

Australia

Telephone: +61 7 3867 1711

Facsimile: +61 7 3867 1775

1999 revenues: A$2.3 billion (Comalco only)

Website: www.comalco.com.au

The sole business of Comalco, a wholly-owned subsidiary of Rio Tinto, is

bauxite mining, alumina refining, and aluminum smelting. The Weipa bauxite

mine in Queensland, Australia, is Comalco’s cash cow. In 1957, Commonwealth

Aluminium Corporation and British Aluminium Company formed a partnership

named Comalco, which signed an 84 year lease with the Queensland Government

to mine the Weipa bauxite. (www.comalco.com.au) Comalco owns 100% of the

massive Weipa pit, which produced over 11 million tons of bauxite in 2000.

The Weipa bauxite is processed two refineries. Comalco owns a majority

stake (56% stake) in the Sardinia, Italy, alumina refinery Eurallumina,

which produced 575,000 tons of alumina from Weipa bauxite for Comalco in

2000. It owns a 30% stake in Queensland Alumina Ltd. (Australia), which

refines almost one million tons of Weipa bauxite for Comalco annually. Last

year, the company decided to add site a new 1 million ton per year alumina

refinery in Queensland, ruling out a possible location in Sarawak,

Malaysia. (see Human Rights chapter)

Comalco also owns a 4% production share of the Boké, Guinea, bauxite mining

operation.

In 2000, it produced 701,000 tons of primary aluminum from three smelters

its 100%-owned smelter in Bell Bay, Tasmania, its 54%-owned smelter on

Boyne Island, Queensland, and its 79%-owned smelter on Tiwai Point, New

Zealand.

In 1999, Rio Tinto increased its interest in Comalco to 72%. Rio Tinto

continued to increase its majority stake in Comalco through 1999 and in

February 2000 made an offer for all the outstanding shares.(Stephen

Johnston, “Aluminium,” Mining Annual Review, March 2000)

The company is now a wholly-owned subsidiary of Rio Tinto, an infamous

global metals producer. Aluminum accounted for 16 percent of Rio Tinto’s

turnover in 2000. Its other mining operations, which span the globe,

include industrial minerals (590,000 tons of borate, 1.4 million tons of

titanium dioxide, 21% of turnover), iron ore (64 million tons, 11% of Rio

Tinto turnover), copper (865,000 tons mined, 15% of turnover), gold (2.7

million ounces mined, 15% of turnover), coal and uranium oxide (combined

17% of turnover, 132 million tons of coal, 2,195 tons of uranium oxide).

(“Rio Tinto Earnings Grow 18 per cent to US$1,507 million,” Rio Tinto press

release, Feb. 5, 2001)

Since the start of 2000, in addition to the Comalco sublimination, Rio

Tinto took control of an iron ore, copper, and uranium oxide producer named

North for $2 billion, diamond and gold producer Ashton for $400 million,

the Lemington coal mine for $134 million, and the Australian coal assets of

Peabody for over $500 million. (ibid)

#7 – Aluminium Bahrain (Alba)

Aluminium Bahrain

P.O. Box 570

Bahrain

Tel. 973 833448

Fax 973 833833

Website: www.aluminiumbahrain.com

Chief Executive: Karim Salimi

Revenues: not available

The government-controlled Aluminium Bahrain (Alba) smelter is a dominant

economic force in the Persian Gulf emirate .Oil production is the only

industry that is bigger in Bahrain. The company started producing 120,000

ton of aluminum per year in 1971.

The smelter started as a joint venture between the Bahrainian government

(18%), General Cable (17%), British Metal (17%), Kaiser (17%),

Electrokopper (17%), Breton Investments (9.5%), and Western Metals (8.5%).

The government of Bahrain now owns 77% of Alba’s shares. The balance is

held by the Saudi Public Investment Fund (20%) and Breton Investments (3%).

(www.aluminiumbahrain.com/intro/share.htm)

Alba is slated to expand from 496,000 to 750,000 tons per year of capacity.

Five engineering companies (SNC Lavalin of Canada, Sofresid of France, and

U.S. firms ICF Kaiser, Bechtel, and Fluor Daniel) are bidding to draw up a

feasibility study and master plan for the $1 billion expansion project.

(European Institute for Research on Mediterranean and Euro-Arab

Cooperation, October 2000, on website: http://www.medea.be/en/index023.htm;

Middle East Business Intelligence, Jan. 5, 1996; AFP, Aug 27, 1995;

Moneyclips, Nov. 21, 1996; “Bahrain Country Profile” at

worldinformation.com)

#8 – CVG

Corporación Venezolana de Guayana

Avenida Guayana con Carrera Cuchivero

Edificio Sede CVG

Altavista, Puerto Ordaz,

Estado Bolívar, Venezuela.

Phone: 58 (86) 661735

Fax:: 58 (86) 614161

Website: www.cvg.com

The governement launched the Venezuelan Corporation of Guayana (CVG) in

1960 to promote industrial development in the Guayana region. Its Bauxilum

subsidiary mines over 4 million tons of bauxite a year.

It is installing a new 250,000 ton potline at the Alcasa smelter in Bolivar

State, which would more than double its 210,000 tpy capacity. CVG is trying

to attract foreign investors in the $800 million project. Reynolds (now

part of Alcoa) owns a 7.3% stake in Alcasa. (Venezuelan Commercial Office)

CVG’s Venalum subsidiary operates a 430,000 tpy smelter. Six Japanese

partners (Showa Denko, Kobe Steel, Sumitomo Chemical, Mitsubishi Aluminum,

Mitsubishi Metal, and Marubeni Corp.) own a 20% stake in the Venalum

smelter, the ninth largest in the world. (Venezulean Commercial Office)

The state corporation also produces steel, hydroelectric power, and power,

engages in industrial agriculture and forestry, and promotes tourism.

(www.cvg.com)

#9 – Kaiser / Maxxam

Kaiser Aluminum

Maxxam Group Holdings

5847 San Felipe, Suite 2600

Houston, Texas 77057

Phone: 1-713-975-7600

Kasier president: Ray Milchovich

Maxxam CEO: Charles Hurwitz

2000 Kaiser revenues: $2 billion

Website: none

Kaiser is a subsidiary of Maxxam Inc., which owns 63% of Kaiser’s common

stock. The balance of Kaiser’s stock is publicly held. (Maxxam Group

Holdings Inc., Form 10-K (Annual Report, FY1999), filed with Securities and

Exchange Commission, March 13, 2000)

While giants like Alcoa, Alcan, and Billiton thrive through mergers,

expansion, and acquisitions, Kaiser has struggled. It lost $39 million in

the third quarter of 1999, and $17 million in the third quarter of 2000.

(ibid)

In the midst of the Alcoa and Alcan mergers, Kaiser president Ray

Milchovich said it was like “dancing with elephants” 10 times your own

size. Financial Times reported that “he added – admittedly in the context

of the company’s protracted steelworkers’ lockout – that Kaiser needed to

display agility, flexibility, and behavior appropriate to its size and

complexion…. Kaiser, which has suffered an explosion at its Gramercy

refinery, on top of its labor dispute, is respected for its tough

management style and its ability to keep ancient plants running. Its

alumina operations are low cost and it is also one of the five companies

that have signed an exclusive 10-year supply deal with Boeing.” Boeing’s

other corporate suppliers are Alcoa, Kaiser, Hoogovens and Pechiney.

(Gillian O’Connor, “Hyperactivity in a strong market,” Financial Times,

2000, and “Who’s Who: Mergers, takeovers in high summer,” Financial Times

at FT.com website)

Beginning in January 1999, Kaiser locked out United Steelworkers union

members from working at its U.S. operations, including two aluminum

smelters (the 200,000 ton per year Mead and 73,000 ton per year Tacoma,

Wash. plants) and the Gramercy, La., alumina refinery. In April 2000, the

National Labor Relations Board’s general council said the federal

government would charge Kaiser violated labor laws by initiating the

lockout.

(Institutional Shareholder Services, “ISS supports dissident director

nominees at Maxxam,” filed by the Committtee of Concerned Maxxam

Shareholders with the SEC, May 22, 2000)

A July 5, 1999, explosion at its alumina refinery in Gramercy also

contributed to the drop in revenues. Replacement workers were injured in

the explosion in the digester area of Kaiser’s 1.075 million ton alumina

refinery in Gramercy, Louisiana. Twenty workers were injured, and three

sustained severe disabling injuries. The explosion closed the plant,

sprayed bauxite up to two kilometers away, and severely curtailed bauxite

production in Jamaica. (Stephen Johnston, “Aluminium,” Mining Annual

Review, March 2000)

According to the Mine Safety and Health Administration of the U.S. Labor

Departmetn, “the immediate cause of the explosion was an excessive pressure

build up in pressure vessels in the digestion process area of the facility,

following an electrical fault causing a power distribution failure… MSHA

found deficiciencies in the pressure relief safety systems, which MSHA

concluded were violations of the regulations.” Kaiser agreed to pay

$513,000 in penalties to resolve the agency’s complaint. (Secretary of

Labor, “Secretary’s revised motion to approve settlement and motion to

dismiss,” Kaiser Aluminum & Chemical Corp. v. Secreatary of Labor et al,

penalty proceedings, Office of Administrative Law Judges, Federal Mine

Safety and Health Review Commission, 2000; “Alcoa, Alcan increase earnings

in third quarter,” New Steel, Dec. 1999)

While Kaiser’s U.S. operations remain in turmoil, it is expanding its

aluminum operations overseas. International operations include a 90 percent

stake in the 200,000 tpy Valco smelter in Ghana; a 49% stake in the 135,000

ton per year Anglesey smelter in Wales, U.K., a 65% stake in the Alpart

baxuite mining/alumina refining venture in Jamaica, a 49% stake in the KJBC

bauxite mining venture in Jamaica, and a 28% stake in the Queensland

Alumina refining company in Australia. (Maxxam 10-K) In 1996,

Kaiser/Maxxam reported that it had a pending collaboration with the huge,

749,000 ton, Krasnoyarsk smelter in Russa and a pending project, named

Kyril, to collaborate with smelter developments in Lanhzou and Lianhai,

China. (Maxxam Inc., Amendment No. 2 to Form S-3 filed with SEC on April

12, 1996)

After 718 days, Kaiser and the Steelworkers reached a settlement in Sept.

2000, and the lockout finally ended. (Karen Dorn Steele, “Analysts call

aluminium company’s settlement a win for solidarity,” Spokesman-Review,

Sept. 24, 2000)

Then, Kaiser used a novel approach to turn a profit in the fourth quarter

of 2000. Instead of reopening its Washington state smelters, the company

decided to sell its allotment of federally-produced power on the open

market, thereby benefitting from the growing energy crisis in the western

USA (see Energy chapter). It reported net income of $10.9 million in the

fourth quarter of 2000. “In the fourth quarter, the company sold power

provided by its existing contract with the Bonneville Power Administration

amounting to approximately $135 million,” a Kaiser press release reported.

(Kaiser Aluminum Corp., “Kaiser Aluminum Reports Results for Fourth

Quarter, Full Year of 2000,” press release, Feb. 7, 2001)

Kaiser’s corporate parent, Maxxam, is run by chairman/CEO/president Charles

Hurwitz, who is the target of many union and environmental activists. (See,

for example, www.jailhurwitz.com and www.uswa329.org) Fortune Magazine

recently ranked Maxxam’s board as one of the 10 worst in the United States,

citing Hurwitz’ dominance. (Spoekesman-Review, Sept. 24, 2000)

Maxxam and Hurwitz took control of Kaiser in 1988, allegedly with the

backing of Marc “Aluminum Finger” Rich (see below). The corporate parent’s

main business is logging, particularly cutting down redwoods and Douglas

Firs in California, through its Pacific Lumber subsidiary. Maxxam also

develops real estate in Puerto Rico, Arizona, and California, owns a horse

racing park in Houston, and a greyhound racing track in Harlingen, Texas.

“Hurwitz started out a crook and he hasn’t stopped since,” wrote Darryl

Cherney, a California redwoods activist. In the early 1980s, Hurwitz was

found guilty of illegal stock market

dealings.(www.jailhurwitz.com/sevensins.html)

In 1995, the U.S. Treasury Department’s Office of Thrift Supervision (OTS)

initiated an action that alleges midsconduct by Hurwitz and Maxxam in the

failure of United Savings Association of Texas, a savings and loan company.

This failure forced a federal bailout totalling $1.6 billion. The OTS is

seeking either $821 million in resititution, or reimbursement of $362

million for “unjust enrichment.” (ibid; Maxxam 10-K, FY1999)

#10 – VAW (Germany)

VAW aluminium AG (Vereinigte Aluminium Werk)

Georg-von-Boeselager-Str. 25

53117 Bonn / Germany

Tel: + 49 / 228 – 552 2312

Fax: + 49 / 228 – 552 213

Website: www.vaw.com

Annual revenues: DM6 billion

VAW is an independently-run subsidiary of a German electricity congolmerate

formed by the merger of Veba and Viag, which merged in 1999. (“Who’s Who:

Mergers, takeovers in high summer,” Financial Times at FT.com website.)

In the 1970s, VAW established its two smelters, both in Germany (Elbewerk

in Stade and Rheinwerk near Neuss) in the 1970s, when it also build the AOS

alumina plant in Stade. Beginning in the 1990s, VAW began exporting

technical support and engineering collaborations at smelters like Alusaf in

South Africa, Novokuznetsk in Russia, and Boyne Island in Australia. (VAW

Aluminium-Technologie GmbH, “Company information,” at

http://www.vaw-atg.de/company.html)

VAW’s alumina refinery in Stade imports bauxite from the CGB consortium in

Guinea, in which VAW is an investor. (see Basics chapter) VAW also owns

several rolling mills in Europe, and owns a 24% world share in the high

purity aluminum business. It acquired high purity aluminum market leader

Mitsubishi in 1999. (Stephen Johnston, “Aluminium,” Mining Annual Review,

March 2000

The company boasts that “from beverage cans and peel-off lids for yoghurt

pots to toothpaste tubes, from packaging for tablets through engine

castings and car body components to roller blinds and printing machines –

in nearly all areas of life, aluminium products made by VAW play a key

role. VAW produces flexible packaging for the food and pharmaceutical

industries, strip and foil mainly go into packaging, automotive,

applications and offset printing or are used as façade cladding.

Furthermore, VAW is the world’s leading supplier of aluminium engine blocks

and cylinder heads.” (“VAW aluminium AG at

http://www.sovereign-publications.com/vaw.htm)

In October 2000, the Financial Times reported that “VAW is heading for the

auction block, following Viag’s merger with Veba, to form energy group Eon,

which is now

getting rid of non-core interests…. VAW, whose most attractive assets are

probably its half-share in the Norf rolling mill and its auto engine block

casting business, is estimated to be worth Dollars 2.5bn-Dollars 3bn. Norf

is the largest rolling mill in the world, while VAW is the world leader in

aluminium engine blocks.” (Gillian O’Connor: VAW continues to attract much

attention,” Financial Times, October 25, 2000)

#11 – Dubal (U.A.E.)

Dubai Aluminium Company Limited

P.O.Box : 3627 Dubai

Tel : 04-8846666/8022926

Fax : 04-8846919

CEO: Ian Rugeroni

Website: www.dubal.co.ae

1998 revenues: Dh2.46 billion

“The starting point for us was indubitably the vision of Dubai’s Ruler, His

Highness the late Sheikh Rashid bin Saeed Al Maktoum who decreed that a

smelter should be built,” asserts Dubal CEO Rugeroni. “With the leadership

of HH Sheikh Hamdan bin Rashid Al Maktoum, Chairman of Dubal, and our Vice

Chairman, H.E. Mohammed Al Abbar, supported by a dedicated management team

and a workforce of over 2000 employees, we have been able achieve much of

what was originally planned.” (“Productivity in Partnership at

http://www.sids.com/update/april98/dubai.htm)

Dubal Aluminium (Dubal) opened in 1979 and expanded from 375,000 to 536,000

tons of capacity in 1999, making it the third largest smelter in the world.

(Bricad Associates website, http://www.bricad.com/aluminium/dub/index.html;

Dubal website, www.dubal.co.ae; “Dubal Sales, Output Break Records,” May

25, 1999 at www.useinteract.com)

The company’s reach is transnational. Dubal is pondering the construction

of a new $2.5 billion, 480,000 ton smelter in Oman and provides technical

services to the 200,000 tpy Al-Mahdi smelter in Iran. The government of

Iran owns a majority share of Al-Mahdi, with the rest owned by

International Development Corp. of Dubai. International Development Corp.’s

investors included fugitive billionaire Marc Rich, U.K. construction

company George Wimpey, Caradel Investments, and former UAE ambassador to

London, Mahdi Al-Tajir. (Mining Annual Review, June 1992; Rasha Owais,

“Dubal studies Oman smelter project,” Gulf News, April 10, 1999)

It imports 60,000 tonnes of alumina every three weeks from Alcoa’s Kwinana

refinery in Western Australia. Australian Trade Minister Mark Vaile met

with Dubal’s Rugeroni last year, after the CEO expressed concerns over

labor unrest at Kwinana. A ministry press release reported that “meeting in

Dubai with senior managers of Dubal, Mr Vaile said Australia was fully

committed to meeting its alumina supply obligations to the company with a

contracted value of $1.4 billion over the next eight years.”

“All our export customers, especially a smelting operation such as Dubal,

must have reliability of supply. We simply cannot afford to have our

reputation as a reliable supplier damaged. The jobs of Australians in vital

export industries must not be put at risk by the selfish action of others,”

said Mr. Vaile. (Australian Minister for Trade, “Reassurance on alumina

supplies,” media release, March 3, 2000)

#12 – Ormet (USA)

Ormet Primary Aluminum Corporation

1233 Main Street, Suite 4000

Wheeling, WV 26003

Phone: (304) 234-3900

Toll Free: (800) 331-6950

Fax: (304) 234-3929

Phone: 304-234-3900

CEO/Chairman: R. Emmett Boyle

1998 revenues: $780 million

Website: www.ormet.com

R. Emmett Boyle owns 100% of Ormet, which was established in 1956 by Olin

Corporation and Revere Copper and Brass, Inc. “to produce primary aluminum

for sale in equal measure to the parent companies.” In 1986, Boyle bought

out the company from its then-owner, Alusuisse, and restarted its shuttered

Burnside, La., alumina refinery.

. (http://www.ormet.com/ormet/history.html)

Since 1957, Ormet has operated an alumina refinery in Burnside, La., and a

smelter in Hannibal, Ohio. Production capacity at Burnside could reach 1

million tons under a modernization program launched in 1999.

(www.ormet.com; Plunkert, 2000)

According to the United Steelworkers of America, Boyle secretly funneled

money in a 2000 campaign against the re-election of an Ohio judge that he

views as pro-union.

“The Ohio Elections Commission is investigating charges that a committee,

which includes the leaders of two companies that have a history of locking

out Steelworkers, violated campaign financing laws in the November state

supreme court races,” reported the USWA in November 2000.

“The smear campaign against an Ohio Supreme Court justice who has sided

with labor’s causes was financed by a secret $3 million slush fund that

included solicitations by Emmett Boyle, who locked out Steelworkers at

Ravenswood Aluminum in 1990. Boyle is now heard of Ormet Corp., where

Steelworkers have been working without a contract since May 31, 1999.

“Resnick won reelection handily and many observers feel the campaign

spearheaded by the Ohio Chamber of Commerce did her more good than harm.

Steelworkers joined with other unions in Ohio to raise money to help

Resnick overcome the Chamber’s onslaught.

In that campaign, television ads suggested that Justice Resnick took bribes

from special interests.

“The Ohio Chamber was able to raise that amount of money ($3 million) in

part because donors were assured that their contributions would be kept

secret. Some Ohio businesses also received calls from Republican Gov. Bob

Taft soliciting money for the smear campaign.

“Shortly after the election, the Ohio Elections Commission found ‘probable

cause’ that the chamber committee violated the state’s election laws by

refusing to release the names of contributors to the anti-Resnick campaign

and for suggesting Resnick made decisions based on campaign contributions.

A hearing will be held sometime after the first of the year to investigate

the charges further. (“Enemies of Labor under investigation,” Steelabor,

Nov-Dec. 2000 at http://www.uswa.com/steelabor/NovDec00/aksmear.htm)

Other Notables

Hoogovens / Corus Group

Corus Group plc

15 Marylebone Road

London, NW1 5JD

England

Tel.: 020 7 314 5500

Fax: 020 7 314 5600

Chairman: Brian Moffat

Hoogovens Aluminium BV

Postbus 10000, 1970 CA,

IJmuiden Vondellaan 10

1942 LJ Beverwijk

Netherlands

Tel: 0251-499108

Fax: 0251-470220

Giant British Steel and Hoogovens, a Dutch aluminum and steel producer,

merged in 1999 and created the largest steel company in Europe, named

Corus. According to the Financial Times, “Most industry observers expect

the British Steel-Hoogovens merger eventually to prompt the disposal of

Hoogovens’ aluminium interest.” (“Who’s Who: Mergers, takeovers in high

summer,” Financial Times at FT.com website; Stephen Johnston, “Aluminium,”

Mining Annual Review, March 2000)

Hoogovens imports alumina from Suriname, owns a 97,000 ton smelter in

Delfzijl, Netherlands, and a 80,000 ton smelter in Voerde, Germany, and has

aluminum divisions in Belgium and Quebec. (Tom Stunza, “Aluminum merger and

acquisition activity accelerates,” Purchasing Magazine, Oct. 7, 1999)

WMC Ltd.

WMC Ltd.

(formerly named Western Mining Corporation)

360 Collins St. 31st Floor

Melbourne, Victoria 3000

Australia

Phone: 61-3-602-300

CEO: Hugh Morgan

WMC holds an interest in the Suralco bauxite mining joint venture, with

Alcoa and Billiton, in Surinam. In 1994, WMC entered into a global alumina

refining joint venture with Alcoa, and owns 40% of the venture, Alcoa World

Alumina & Chemicals. When the two companies combined alumina operations,

the venture had anual revenues of close to $3 billion a year.(“Alcoa

Acquires Discovery Alumina Chemicals Business,” Industrial Specialties

News, July 10, 1995)

Prior to Alcoa’s purchase of Reynolds, the WMC/Alcoa venture controlled

more than 30 percent of global alumina capacity. (American Metal Market,

January 26, 2001)

In October 2000, when asked about the implications of the Alcoa-Reynolds

combine, WMC’s chief executive officer, Hugh Morgan replied , “The direct

implication is AWAC acquired some additional bauxite resources in Africa

and South America. Under the AWAC agreement between Alcoa and WMC,

anything involving the acquisition of bauxite, alumina or alumina chemicals

goes in the AWAC pot. Also, the justice department ruling means AWAC cant

purchase additional alumina capacity thats sold to the traded marketplace

(i.e. the material thats not vertically integrated). But this doesn’t limit

internal expansions. AWAC has tremendous growth opportunities.” (“Open

Briefing WMC CEO Morgan on Record Profit,” Australian Associated Press

Company News, Aug. 15, 2000)

WMC is also a major miner of uranium, gold, and nickle. (“The Bechtel

Truth – Notes for the Alternative AGM of WMC,” Roxby Action Collective,

Nov. 20, 1997 at http://www.sea-us.org.au/roxby/bechteltalk.html)

Marc Rich

Marc Rich & Co. Holding

Baarerstrasse 53

6304 Zug

Switzerland

Phone: 041/709.08.44

Fax: 041/709.08.29

Billionaire Marc Rich lives in Zug, Switzerland, where he moved in 1983

just before the U.S. government gained an indictment against him for

evading corporate taxes of $48 million, fraud, and circumventing the U.S.

oil embargo against Iran. He renounced his U.S. citizenship, paid a $113

million settlement check, but remained a fugitive until President Bill

Clinton pardoned him in a controversial last-hour order in January 2001.

Rich is a secretive tycoon who holds the nickname “Aluminum Finger.”

(“Aluminium Finger” reference from untitled article, Evening Standard, Jan.

30, 1996)

In addition to his aluminum interests, Rich “also has been accused of

smuggling oil to South Africa during apartheid and of selling embargoed

Iraqi oil,” reported The Nation (Feb. 12, 2001). The New York Daily News

(Jan. 28, 2001) said Rich “went from New York University dropout to

mailroom clerk to modern-day alchemist, turning lead and aluminum – and

smuggled oil – into pots of gold…. (Although there is) no conclusive

proof, Rich and his shadowy companies are said to have looted gold from the

collapsing Soviet Union, sold Korean weapons to Iran, illegally cornered

the tin and aluminum markets, made off with chunks of the Gross Domestic

Product of Finland and Romania and jumped into bed with the Russian mafia.”

(Helen Kennedy, “Ruthlessness is Rich’s game,” New York Daily News, Jan.

28, 2001)

“With a potent combination of trading genius, nerves of steel and

tissue-thin morals, Rich became a billionaire, buying and selling oil and

metals in fiendishly complicated maneuvers,” the Daily News explained.

(ibid).

Rich pressed his case to President Clinton in fear of possible retribution

from former Alcoa president O’Neill. O’Neill is President Bush’s new

Treasury Secretary. According to the Wall Street Journal (Jan. 23, 2001),

“People close to Mr. Rich said the need for a pardon took on an added sense

of urgency with the impending change of an administration. Of particular

concern to Mr. Rich was the appointment of Paul O’Neill as Treasury

secretary… One of Mr. Rich’s metal-trading company’s scooped up Alcoa’s

bauxite and alumina production in Jamaica. ‘Rich was frightened O’Neill

would get the government to come after him again,’ a person familiar with

the federal manhunt for Mr. Rich said. Treasury officials said they

wouldn’t comment on the matter.”

In the mid-1980s, when demand for aluminum dropped, Alcoa closed the

Jamalco bauxite mining/alumina refining complex in Clarendon Parish. In

response, the Jamaican government signed a 10 year suply contract with Rich

and assumed responsibility for production at Jamalco. In the 1990s, with

alumina markets tightening, Alcoa resumed its role as managing partner of

Jamalco. (Canute James, “Jamaica metals market improves – Bauxite,”

Financial Times, Feb. 12, 1990; “Discover Mandeville” at

http://discoverjamaica.com/gleaner/discover/tour_ja/tour7.htm)

Rich shipped bauxite to his alumina refinery, Vialco, on St. Croix, U.S.

Virgin Islands. Vialco was sold to Alcoa in 1995. (Bob Regan, “Alcoa

refinery spared by Hurricane Lenny,” American Metal Market, Nov. 19, 1999)

In 1983, Rich opened an office in Moscow. Soon, he supplied the Soviet

Union with grain in contrvention of U.N. embargo over the Afghanistan war,

and heavily traded in aluminum.. By 1992, Marc Rich engaged in an estimated

$3 billion of trade in the countries of the former Soviet Union. Former

Russian Trade Minister Oleg Davydov attributed the rising corruption in his

country in part to people like Marc Rich. When “legal channels became

inconvenient [for Russia’s new businessmen], there appeared a huge mass of

foreign entrepreneurs, mostly crooks like Marc Rich, who began to teach

us various ways of taking the money out through offshore companies. That

is what bred our whole system of corruption and criminality,” he told

Forbes magazine in 1998. (Kirill Vishnepolsky, “Glencore International

strikes root in Russia,” RusData DiaLine – BizEkon News, April 30, 1996;

Oleg Davydov, “Tomorrow they will take up arms: A chat with Russia’s former

trade minister,” Forbes, Sept. 7, 1998; “El drama en el sector del

aluminio,” June 27, 1998, on eluniversal.com,

http://noticias.eluniversal.com/1998/06/27/OP15.shtml)

Rich bought Kaiser’s smelter and rolling mill in Ravenswood, West Virginia,

in 1988; two years later, he locked out the plant’s unionized workers. In

one of labor’s shining moments of the early 1990s, Steelworkers picketed

Rich’s home in Zug, chased him with a puppet of West Virginia labor icon

Mother Jones, and blocked his purchase of a smelter in Czechoslovakia.

(“Pardon draws protests; Rich fled after indictment, was involved in Kaiser

deal,” Spokesman Review, Jan. 26, 2001)

Rich helped to leverage Hurwitz’ takeover of Kaiser Aluminum in 1988 when

he agreed to purchase $400 million worth of Kaiser’s aluminum. (Cherney)

He was an investor in the International Development Corporation (IDC) of

Dubai, United Arab Emirates, which built the Al-Mahdi smelter in the

mid-1990s. In 1990, IDC proposed a smelter in Algeria, named Medial.

Rich divested himself of many of his aluminum holdings in March 1993, when

he agreed to sell his shares in Marc Rich & Co., which became Glencore

International. In 1994, Rich sold his last 25% stake in Glencore. (“Market

news,” The Mining Journal, Nov. 11, 1994)

In 1996, Rich returned to commodities trading, operating out of a company

named Marc Rich & Co. Holding. According to the Financial Times, “Rich said

he had no doubt that there was room for another commodity trading business,

despite the rise of other physical giants in the intervening period,

including AIOC, Trans-World Metals, the Balli Group and Glencore, most of

which have developed strong business links with the aluminium industry –

the metal he was famed for trading in. ‘We plan to be active in aluminium,

copper, zinc, lead, nickel, metal and concentrates, in addition to crude

oil, petroleum products, grain and coal. Obviously, I feel the prospects

for a company trading in commodities is good,’ he said. (Rachel Carnac,

“Rich return sets the markets buzzing,” Financial Times, February 9, 1996)

In 1998, Rich expressed an interest in aquiring Noranda’s share of the

Friguia bauxite/alumina operation in Guinea, according to Mining Annual

Review (Dec. 1999). Noranda and the other foreign partners, Alcan and

Hydro, sold their 51% stake to the Guinean govenrment in late 1998. The

government, prompted by the World Bank (see Banks chapter), opened bids for

an 85% strake in Friguia. It pre-selected Marc Rich, Anglo American,

Comalco, and Kaiser to bid. In February 1999, however, the government put

the bidding on indefinite hold. Friguia’s managers have also been courting

investment from Iran. Iran is seeking bauxite and alumina for its two

smelters, one of which Marc Rich helped to develop. (“New delay in Friguia

privatization,” Africa Energy & Mining, Feb. 17, 1999; “Four pre-qualified

for Friguia,” Africa Energy & Mining, Dec. 2, 1998)

Chapter IV. Multilateral and bilateral financial institutions

As we have seen with other energy-intensive industries (see EBRD, two WB

reports), multilateral development banks and agencies funded by industrial

governments are helping to finance the aluminum industry’s global

expansion.

Not coincidentally, this industry, worldwide, is dominated by transnational

corporations based in the countries that are financing their power plants,

mines, refineries and smelters. National development banks help

corporations based in their country sell equipment to foreign aluminum

operations and gain ownership stakes in old and new infrastructure.

These institutions have poured over $3 billion into dams and other power

plants that fuel aluminum smelters, into structural adjustment and other

programs designed to open bauxite mines, alumina refineries, and smelters

to foreign investors, and into feasibility studies and equipment sales by

Western corporations.

Focus on Slovak Rep./ Iran smelters

The European Bank for Reconstruction and Development, a multilateral aid

agency funded and managed by Western governments, agreed to finance an

aluminum smelter refurbishment and privatization in the Slovak Republic in

1994. The Slovalco, or ZSNP, operation doubled its capacity to 132,000

tons. The old smelter, in turn, may be shipped to Iran.

The EBRD loaned Slovalco $110 million in three parts beginning in July

1994. Part of the loan financed an investment agreement in which Hydro

Aluminium and EBRD control 10 percent ($15 million each) of Slovalco’s

equity. It was EBRD’s biggest private sector loan to date. The German and

Dutch governments, and the European Union’s PHARE program, financed

environmental studies and community outreach programs.

The EBRD hailed the agreement as “the centerpiece of the overall

restructuring and privatization of ZSNP in which two inefficient and

polluting smelters will be closed down and other major facilities will also

be closed down or upgraded to meet Slovakian and EU environmental

standards. The new smelter, which will provide employment opportunities for

over 500 people in Ziar, will be one of the most efficient in the world.”

(EBRD press release, “EBRD and Slovakian Aluminium smelter sign loan

agreements, July 12, 1994)

The old Slovalco smelter had a poisoned past. In 1996, the Financial Times

reported that a “mountain of red and brown bauxite waste still dominates

the valley approach to the [Slovalco] aluminum works… the legacy of decades

of environmental neglect. Inside the old, inefficient and polluting

smelters have been closed down… [replaced by] the gleaming white and gray

buildings of one of Europe’s most modern aluminum smelters.” (Financial

Times, Oct. 23, 1996)

“The new plant will be energy efficient and safe, and will meet good

international environmental standards,” boasted the EBRD. “The shut-down of

the existing smelters, together with the start-up of the new smelter, will

have a major beneficial effect on occupational health and external air

quality.” (“EBRD industrial projects with significant environmental

benefits: some examples” at

http://www.ebrd.ro/english/enviro/envpub/envfacts.htm/indproj.htm)

But while the EBRD investment replaced chronically-polluting Soderberg

potlines

at the notorious plant with modern pre-bake cells, the old cells may move

to a proposed new smelter on Iran’s Qeshm Island. (Aluminium Today, August

1997)

In 1994, the Center for International Environmental Law (CIEL)termed the

EBRD loan “an especially disturbing example (of) funding of a major

polluter… ZSNP will remain a significant source of pollution in the

region, even though the Bank loan will finance improvements in the

smelter’s environmental performance.

“The ZSNP plant, utilizing approximately 10 percent of the total energy

produced in Slovakia, also puts a severe strain on Slovakia’s overburdened

electricity generating capacity, supporting the government’s contention

that the nuclear power plant at Bohunice, one of the most dangerous in

Central and Eastern Europe, cannot be closed until its capacity can be

replaced….

“The (EBRD) environmental staff submitted a document to the Directors just

prior to the Board’s decision to approve the controversial ZSNP loan. CIEL

discovered that the document had been altered to downplay the environmental

impacts of the project. Later communication with Bank staff revealed that

while some alterations were unintentional, others were deliberate. It is

impossible to know whether the misrepresentations in the document

influenced the Board’s decision to approve the project. Nevertheless, such

alterations breach the trust placed in Bank staff by the Directors.”

(Donald M. Goldberg and David B. Hunter, “EBRD’s Environmental Promise: A

Bounced Check?,” Center for International Environmental Law, December 1994)

In a 1995 follow-up report, CIEL said called the Slovalco smelter “one of

the region’s largest polluters. A bauxite waste site leaches heavy metals

into the soil and groundwater, and the existing factory emits dust, SO2,

NOx, CO, and fluorides far in excess of Slovak and EC air emissions

standards. Off-site testing has revealed high concentrations of

benzopyrene, arsenic, molybdenum, copper, nickel and chromium. Health

problems, including congenital defects, allergies, and thyroid and lung

diseases, are on the rise throughout the region.

“Due to the highly polluting and energy-intensive nature of primary

aluminum production, Slovak environmentalists favored either converting the

plant to secondary aluminum production or closing the plant altogether.

They also argued that the plant made no economic sense. Ideally, for

aluminum production to be economically competitive, a cheap source of

energy, labor, and raw materials should be available. With the exception of

cheap labor, Slovakia has little competitive advantage on the international

aluminum market.

“Nevertheless, the EBRD decided to pursue the project, which already had

been rejected by the World Bank and a number of private investors. Despite

strenuous objections from environmentalists, it was given fast track

status, a protocol that is not provided for in the Bank’s Environmental

Procedures. Most of the procedures for public participation were curtailed:

formal notification to the public about the ZSNP project, public scoping,

and public meetings were dispensed with. Bank staff did conduct a pro forma

meeting with a small number of environmentalists a few days before the

project was submitted to the Board, but by that time it was not likely the

project would be altered.

“The ZSNP project demonstrates that, when faced with financial pressures,

the Bank is willing to forego at least some of its environmental due

diligence. A sustainable development policy and stronger environmental

procedures are urgently needed to help the EBRD withstand such pressures

and ensure that each project receives the appropriate level of

environmental analysis and public consultation.” (CIEL, “The European Bank

for Reconstruction and Development: An Environmental Progress Report,”

1995, at www.ciel.org)

Focus on former Soviet Union, aluminum, and corruption

Since the fall of the “Iron Curtain,” aluminum has flooded Western markets

from the former Soviet Union. Commodities traders Marc Rich and Trans-World

Metals fueled this flood. Foreign governments also got into the act.

As a 2000 U.S. Department of Commerce study noted, “IBRD (the World Bank),

EBRD, the U.S. Export-Import Bank and other countries’ export credit

agencies have been active in attempting to support foreign equipment sales

to Russian aluminum producers.” (Nick Mikhailov, “Russia: Production

equipment for the aluminum industry,” Business Information Service for the

Newly Independent States (BISNIS), U.S. Department of Commerce, July 31,

2000, at http://bisnis.doc.gov/bisnis/000817rsalum.htm)

The involvement of these government agencies in former CIS states’ smelters

thrusts these officials shoulder-to-shoulder with dangerous company. The

Russia aluminum industry is rife with tales of corruption, the black

market, and even killings.

“Over the years, the Russian media, in particular, has pursued telltale

trails leading to connections with the Russian Mafia, bribery, and unsolved

cases of assassination of journalists and people related to the aluminum

industry,” reported American Metal Market in January 2001 ( Christian Kohl,

“Trans-World probe deepens,” American Metal Market, Jan. 19, 2001)

– Globalization and Corruption

The globalization of the former Soviet Union’s aluminum industry can be

traced to the year 1983, when fugitive commodities trader Marc Rich (see

Corporate chapter) opened an office in Moscow. Soon, he supplied the Soviet

Union with grain in contravention of U.N. embargo over the Afghanistan war,

and heavily traded in aluminum.

By 1992, Marc Rich engaged in an estimated $3 billion of trade in the

countries of the former Soviet Union. Former Russian Trade Minister Oleg

Davydov attributed the rising corruption in his country in part to people

like Marc Rich. When “legal channels became inconvenient [for Russia’s new

businessmen], there appeared a huge mass of foreign entrepreneurs, mostly

crooks like Marc Rich, who began to teach us various ways of taking the

money out through offshore companies. That is what bred our whole system of

corruption and criminality,” he told Forbes magazine in 1998. (Kirill

Vishnepolsky, “Glencore International strikes root in Russia,” RusData

DiaLine – BizEkon News, April 30, 1996; Paul Klebnikov, “Tomorrow they will

take up arms: A chat with Russia’s former trade minister,” Forbes, Sept. 7,

1998; “El drama en el sector del aluminio,” June 27, 1998, on

eluniversal.com, http://noticias.eluniversal.com/1998/06/27/OP15.shtml)

By 1994, when Rich sold his stake in the trading business that was renamed

Glencore, his company was eastern Europe’s largest Western supplier of

grain, which he obtained mainly by bartering aluminum from smelters in the

former Soviet Union. (Stuart Penson, “Marc Rich & Co. name changed for

‘morale,’” American Metal Market, Sept. 2, 1994)

As Rich’s inference transferred to the Glencore group, then faded in the

mid-1990s, two brothers in London filled the gap. David and Simon Reuben

founded Trans-World Group (a/k/a Trans-World Metals) in 1977. After the

disintegration of the Soviet Union, Trans-World forged an alliance with

another set of brothers, Lev and Mikhail Chernyi (also spelled Chernoi and

Chernoy), whose Moscow-based Trans-Seas Commodities came to control Russian

aluminum exports.

The Chernyi brothers, said Minister Davydov, “gained control of aluminum

exports at a time when aluminum cost $ 2,000/ton on world markets but could

be bought at $ 500/ton

inside Russia. All the producers became deeply indebted to the brothers,

who made deals with the plant directors to acquire aluminum at the Russian

price. Which they then sold at the world price. The tragedy is that if the

privatized companies were state enterprises today, they would be recording

good profits, they would be paying taxes, paying workers’ wages, investing

in their plant and equipment. But these so-called owners arrived, and what

happened? There are no profits. No tax payments. The plant and equipment

are getting worn out. And the money goes abroad.” (Forbes, Sept. 7, 1998)

In 1995, Trans World took control over the Gyndzha alumina plant and

Sumgait aluminum plant in Azerbaijan from Glencore. The shifting business

climate brought this thought from a Glencore executive, according to

BizEkon News: “One of Glencore Moscow office executives recently pulled no

punches in contending that his company would still be doing deals in Russia

even if a Hitler or someone came to rule it, given Glencore’s prodigious

track record of business collaboration with regimes of any stripes and

shades. (Kirill Vishnepolsky, “Glencore International Strikes Root in

Russia,” RusData DiaLine – BizEkon News, April 30, 1996)

By early 1998, Trans World controlled between 40% and 70% of Russia’s

aluminum industry. Its estimated global sales of $6 billion per year made

the small firm, fleetingly, the third largest aluminum company in the

world. Then, the Chernyi brothers severed ties with their London partners.

By 2001, Trans World had exited from most of its business in the former

Soviet Union. (Matthew Brzezinski, “Kiev’s dreary hotels offer microcosm of

reform failures,” Wall Street Journal, April 16, 1998; American Metal

Market, Jan. 19, 2001)

As Trans World faded, other so-called “aluminum barons” rose, including

politicians Anatoly Bykov and his Krasnoyarsk Enterprise and Anatoly

Chubais and his Russian Joint (or Unified) Energy Systems. (Mining Annual

Review, March 2000)

Other players in Russia’s newly-privatized aluminum industry included Trans

CIS Commodities, Renova, Rial, Al-Invest, Mikom, AIOC, Hunter Douglas,

Metall-Gesellshaft, Pechiney, Gerald Trade, and Daewoo. (Delovoy Mir, April

13, 1995)

The aluminum industry remained a collection of feudal-like enterprises

until the late 1990s, when Siberian Aluminium (Sibersky) began to battle

the Chernyis, and seized control of many smelters.

The battle for control of the former CIS’ aluminum industry took many

forms. Government officials began accusing Trans-World of misconduct

beginning in 1997, when Russian officials investigated allegations that

Trans-World Metals defrauded the central bank and sponsored violence.

Russian Interior Minister Anatolii Kulikov raised the specter of “the

current criminal situation in the non-ferrous industry” when he told the

country’s Parliament about the need to curb western corporations’

influence. He said gang leaders controlled the Krasnoyarsk and Bratsk

smelters. (Mining Journal, June 5, 1998; “Russia Mining,” Cambridge

International Forecasts Country Report, December 1, 1999)

Also during 1997, Russian officials alleged that the general director of

the world’s second-largest smelter, the 749,000 ton Krasnoyarsk smelter,

failed to repatriate $20 million from an alumina deal. (Mining Journal,

June 5, 1998)

In 1998, the government of Kazakstan ousted Trans-World from its management

position at the 1.1 million ton Pavlodar alumina refinery, accusing the

company of “irregularities, tax evasion and failing to act in the best

interests of shareholders.”

As the charges intensified, Trans-World reportedly offered to sell some of

its interests to transnational giant Billiton. (Mining Journal, June 5,

1998)

Violence has ripped at the region’s aluminum industry. In Tajikistan,

government and rebel forces based in Uzbekistan have battled for control

over the Taduz smelter, one of the world’s largest. (see Human Rights

chapter). In Russia, explosives blew outside the Bogoslovsk smelter’s

administrative offices in September 1997. An official called it “an act of

routine revenge.” (Mining Journal, June 5, 1998)

“The 1994-1998 period in the Krasnoyarsk region has been dubbed the “Great

Patriotic Aluminium War”, in which local mafia and factory directors were

sucked into a bloody battle for control of the smelter,” reported the

Financial Times in 2000. “Dozens died in a series of murders, including

local bankers, crime bosses and factory officials. The victims included

both allies and competitors of Trans-World, though David (Reuben) angrily

denies any hint that they or their partners had any role in the violence.

‘There is absolutely no truth to any of the allegations that Trans-World

has been involved in any illegal activity in Russia,’ he says. (Charles

Clover and William Hall, “Aluminium ‘risk-taker’ changes tack in Russia,”

Financial Times, April 12, 2000)

Russian authorities invaded the offices of Bykov and Krasnoyarsk in April

1999. In court, they accused Bykov of “laundering money obtained by illegal

means.” (Mining Annual Review, March 2000)

In June 1999, Bykov, Chernoy/Trans-World, and Visaly Anisimov’s

TrustConsult fought for control over the Kransoyarsk smelter. While Bykov

faced prosecution from Russia, Chernyi had his own troubles. According to

the Mining Annual Review, “Swiss, US and British police were also

reportedly investigating Lev Chernoy over money laundering and organized

crime activities.”

In the winter of 1999-2000, oil magnate Roman Abramovich led a group that

took control of the two largest smelters in the world: the 870,000 ton

Bratsk and 835,000 ton Krasnoyarsk plants. He bought the controlling shares

from Chernoy and Trans-World. (Mining Annual Review March 2000)

That season, car dealer Boris Berezovsky reportedly purchased the fifth

largest smelter in the country, the 284,000 ton Novokuznesk plant.

(Mikhailov; Mining Annual Review, March 2000)

At the same time, Sibirsky Aluminum, led by Oleg Deripaska, built a holding

company around the 400,000 ton per year Sayan aluminum smelter. Reynolds

(now part of Alcoa) has held a 3% stake in Sibersky.

Berezovsky and Abramovich formed an alliance that, within a month, absorbed

Deripaska’s Sibirsky Aluminum. The new umbrella group, named Russian

Aluminum (or Russky Aluminum) dominates the country’s industry. Its five

smelters, with a combined capacity of over 2.1 million tons of production,

generate annual sales of $3.4 billion, according to the U.S. Department of

Commerce. (Mikhailov)

A Russian newspaper tied the buyout to a power struggle between the

aluminum barons and politicos Chubais and Vladamir Putin. “These purposeful

and even aggressive aluminum market deals indicate that Berezovsky,

Abramovich and Chernyi have gone on the attack: they have united in order

to concentrate the ownership of vast strategically-significant assets. They

are doing this in order to kill several birds with one stone,” claimed the

Moskovskie Vedomosti in February 2000.

“Firstly, they want to diminish the influence on the GDP of groups

controlled by their main opponent, Chubais; thus also reducing his chances

of heading the government or

getting one of his people into that post. Secondly, they want to control

the aluminum sector as well as the oil sector, which would give them

influence over the fundamental natural resources sectors of the Russian

economy. Thirdly, of course, it’s a question of personal security.

“Having despaired of reaching an agreement with the acting president now,

and fearing that after the election Putin will initiate a new

redistribution of property, Berezovsky, Abramovich, and the Chernyi

brothers want guarantees of their own security and the security of their

business interests. They figure that Putin will have no choice; he will be

forced to provide guarantees (and concessions) for a single favor: he will

not have to sit down at the negotiation table with several odious

oligarchs, as Boris Yeltsin once had to do. Neither would this be

acceptable to Putin himself; the head of state is unlikely to meet with the

Trans-World Group boss, who has a very shady reputation. Berezovsky would

be a different matter – he is, after all, a member of parliament…

Basically, this is blackmail. Ordinary, blatant blackmail. They are showing

Putin that they aren’t afraid of him.” (“Behind the aluminum deal,”

Moskovskie Vedomosti, February 2000)

Russian Aluminum wants to grow transnationally, particularly into

infrastructure developed by the former USSR. Its targets included the

refineries in Ukraine, Kazakhstan and Romania, and coal mines in Ukraine

and Kazakhstan. (Mikhailov)

Two other large holding companies, SUAL-Trustconsult and NorthWest

Aluminum, were forged out of the on-going industry-wide restructuring in

2000.

SUAL-Transconsult is the product of a three-way merger, in early 2000,

between the Siberian-Urals Aluminum Company, TrustConsult, and Renova. The

new combine owns three bauxite mining companies and four smelters including

the 158,000 ton Bogoslovsk, 252,000 ton Irkutsk, 80,000 ton Urals, and

68,000 ton Kandalaksha plants. (Mikhailov)

NorthWest Aluminum is a holding company proposed by eight aluminum

companies in the Leningrad region. The nascent firm includes the 24,000 ton

Volkhov and 129,000 ton Volgograd aluminum plants and two alumina producers

(Boksitogorsk Alumina and Pikalyobskoye Alumina). Alutech of the U.S. hopes

to set up a 200,000 ton smelter in the region. (Mikhailov)

A recent Dept. of Commerce report said the reorganization held promise for

more Western equipment sales, but added that “the circumstances surrounding

these mergers were highly non-transparent and the identity, objectives and

financial structure of the new management is not sufficiently clear to

reach a judgment about their plans for the new conglomerate.” (Mikhailov)

U.S. companies supply about one-quarter of the equipment imported by the

Russian aluminum industry. Suppliers include Alcoa, Alutec, Kaiser (two

potroom cell upgrades to Krasnoyarsk), Loma Machine Mfg., Pyrotec Inc. and

Wagstaff Inc. According to the U.S. Dept. of Commerce, “the most

aggressive non-American players in the Russian aluminum equipment market”

are: Germany’s Mannesmann, Schloemann, Wagner, and VAW (designed an upgrade

at Novokuznetsk); France’s Pechiney and Clecim; Italy’s Hunter Midia,

Continuus Properzi, and Mino; Britain’s Megatherm and JMC; Japan’s Itochu

and Mitsubishi Heavy Industry (they want to finance an expansion at Sayan);

and, Austria’s Ebner. (Mikhailov)

– Still in turmoil

The aluminum industry in Russia remains tumultuous after the

consolidations. Men who shaped the post-Soviet industry have been charged

with murder, money laundering, and collusion with the Mafia.

On Oct. 4, 2000, Agence France Presse reported that Russian police arrested

Bykov, “once known as Russia’s ‘aluminum baron,’ in the Siberian city of

Krasnoyarsk on Wednesday while investigating the murder of a local

underworld figure… Bykov is accused of several crimes, including fraud,

money laundering and being implicated in another murder. Bykov was arrested

at his home Wednesday on suspicion of involvement in the September 29

murder in Moscow of Pavel Struganov… Struganov, suspected of being a

leading figure in Krasnoyarsk criminal circles, was killed along with

another man in broad daylight in central Moscow.” (“Russia’s former

‘Aluminum baron’ returns to prison, Agence France Presse, Oct. 4, 2000)

Earlier in the year, Bykov was extradited from Hungary to face the other

charges, and was released on bail in September. (“Two businessmen killed in

central Moscow,” Agence France Presse, Sept. 29, 2000)

An April 25, 2000, article in Noviye Izvestia asked, “. Who is he, Anatoly

Bykov: the godfather of the aluminum mafia, or just another victim of

political showdowns and property redistribution? And most importantly, what

will happen when Bykov starts talking? His testimony is expected to be a

real blow to many people in high places: Anatoly Bykov’s personal friends

and enemies, partners and competitors include quite a few politicians in

the top echelon of power, as well as important government officials,

businessmen, financiers and even officials of various security and

law-enforcement agencies. Hence the speculations that there will be an

attempt to get Bykov “out of the way” now that he’s back in Russia. If that

is really so, we can expect surprises not so much from his enemies as from

his “friends,” since Bykov undoubtedly has suitcases full of “exclusive

dirt” on them. The criminal world, which lives by its own laws, also has

grievances against Anatoly Bykov.

“Here’s a quotation from a letter to him from crime kingpin Vladimir

Tatarenkov, a.k.a. the Tatar, who was recently arrested in Greece and is

now giving testimony in a Russian prison: ‘Dear Anatoly Petrovich! I have

recorded numerous videocassettes telling about the way you have been living

for the past few years, and about how much blood was shed so that you could

become what you are now. Don’t you have nightmares about the people who

died at your orders, though not by your hand? . . . The people who elected

you would be awfully surprised to find out who they voted for. Russia has

never been fond

of murderers.’” (Yevgeny Latyshev, “Who has an interest in seeing Bykov

eliminated?,” Noviye Izvestia, April 25, 2000)

In Dec. 2000, two trading companies, Base Metal Trading of Switzerland and

Alucoal of Cyprus, filed a $2.7 billion suit in U.S. District Court against

Russian Aluminum, Sibersky Aluminum, Deripaska, and Mikhail Chernyi.. The

companies claimed that the Russian aluminum giants “joined with the

Izmailovo Mafia to illegally monopolize the metals market left vulnerable

after the collapse of the Soviet Union. They allege abuses that violate

Racketeer Influenced and Corrupt Organizations Act, and they claim to have

suffered $ 900 million in losses,” according to the National Law Journal.

(“3-nation aluminum suit,” National Law Journal, Jan. 8, 2001)

“The complaint enumerates specific allegations of murder, extortion, and

mail and wire fraud, among other criminal acts allegedly orchestrated by

the defendants and carried out in some instances by the

Izmallovo-Russian-American mafia,” reported Mining Journal. “The core of

the claim is that, when the defendants were unable to negotiate a legal

purchase of NKAZ, they resorted to extortion to seize control of the

smelter and a greater portion of its trading profits. Amongst other

tactics, the complaint says that the defendants enlisted the assistance of

government and judicial officials in pursuing and winning falsified

bankruptcy proceedings” (“Russian Aluminium named in RICO suit,” Mining

Journal, Dec. 22, 2000)

“Criminal elements have besieged Russian industry with illegal payoffs,

threats and acts of violence. This case will demonstrate how U.S. financial

institutions are used by criminal, elements to accomplish their purposes.

U.S. courts have the power and opportunity to prevent Russian oligarchs

from using the U.S. banking and commercial systems to facilitate criminal

conduct in other countries,” claimed the plaintiffs’ attorney, Robert

Abrams. (Base Metal Trading: Russia’s Largest Aluminum Company Named in

US$2.7 Billion RICO Suit,” Canadian Corporate Newswire, Dec. 20, 2000)

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