Suppliers News (September 03, 2007)

Aker Kvaerner posts strong quarter

Norwegian engineering firm Aker Kvaerner reported a 47% boost in profits during its second quarter, outpacing most projections. Pretax earnings rose to 993 million Norwegian kroner (C$180 million), up from 676 million kroner (C$123 million) in the same quarter last year.

Total operating revenue for the second quarter of this year amounted to 14.6 billion kroner (roughly C$2.72 billion), an increase of 16% compared with 12.6 billion kroner (C$2.34 billion).

Aker Kvaerner’s share price reached 150 kroner (about C$27) at the end of the second quarter, up from 137 kroner (about C$24.60) in the first quarter.

Aker Kvaerner took new orders worth 13.3 billion kroner (C$2.38 billion) in the second quarter. As of June 30, the order backlog was 60.9 billion kroner, an increase of 21% from the end of last year’s second quarter and a 2% increase from the end of 2006. Aker attributes the growth to new contracts and further work on existing ones.

During the second quarter Aker Kvaerner announced a buyback of 1.22 million shares, which will cost the company about 174 million kroner (C$32 million). Aker Kvaerner holds roughly 2.49 million shares of its 274 million shares outstanding.

In June, Aker ASA, companies affiliated with Sweden’s Wallenberg family empire, and the Norwegian government signed agreements to change the ownership structure of Aker Kvaerner.

Aker will transfer its 40.1% stake in Aker Kvaerner to a new company, Aker Holding. Aker will hold 60% of Aker Holding, the Norwegian government will own 30%, and Swedish companies SAAB and Investor AB will own 7.5% and 2.5%, respectively.

In other news, Aker Kvaerner recently signed a deal to buy half of the shares in German company Wirth. Aker has the first chance at the rest of the shares over the next few years.

Wirth builds drilling equipment and has supplied Aker’s drilling equipment unit for more than 20 years. Wirth, which has a strong order backlog, employs 480 people and posted revenue of 140 million euros (C$200 million) in 2006.

Alcan, BC Hydro sign Kitimat pact

Alcan has a new power supply agreement to deliver Alcan’s surplus power to BC Hydro until the end of 2034.

The long-term power agreement still needs to be approved by the British Columbia Utilities Commission (BCUC). The agreement was filed with the BCUC and will be available to the public as part of the approval process.

“This is a significant step toward the modernization of Kitimat Works,” said Michel Jacques, president and CEO, Alcan Primary Metal Group. “Alcan is as committed as ever to realizing this project in B.C.”

The Kitimat Works modernization project was announced in August 2006. If the project receives the necessary approvals, Kitimat’s aluminum production capacity would increase by 40% and reduce greenhouse gas emissions by half a million tonnes per year, owing to a more energy-efficient smelting technology. The expansion at Kitimat would increase Alcan’s annual global primary aluminum production by more than 4% and make Kitimat one of the three largest aluminum smelters in North America.

The modernization needs the final approval of Alcan’s board and must meet three conditions: signing a new, long-term energy supply agreement from the BCUC; the resolution of environmental permitting issues, and a long-term labour agreement with the Canadian Auto Workers (CAW).

Alcan reached an agreement with the CAW in May 2007. And with the new agreement with BC Hydro, Alcan is a step closer to satisfying two of the three conditions.

Alcan is currently discussing permitting issues with federal and provincial environmental authorities.

In July, Alcan hired consulting firm Bechtel to produce feasibility and preliminary engineering studies to confirm the cost estimate and overall project and execution schedule of the Kitimat expansion. Terms of the contract were not disclosed.

Later that month, Alcan was the subject of a friendly takeover offer by London-based Rio Tinto (RTP-L, RTP-N) for about US$38 billion.

Mechel commissions new machines

Russian metals producer Mechel has commissioned new backhoe excavators at its iron ore subsidiary, Korshunov Mining, and at the nickel deposits of subsidiary, Southern Urals Nickel.

Mechel says the new machines will boost annual excavation productivity by 30%, while reducing costs. The new excavators cost a combined US$6.5 million.

A Liebherr excavator, with a 9-cubic-metre bucket, was commissioned at the Korshunov open-pit iron mine. The excavator is designed to excavate ore in confined spaces at the bottom of a pit. This should allow it to reach more iron ore at greater depths in Korshunov.

The new machines allow Mechel to shelve two aging excavators at the iron mine.

A Komatsu excavator, with a 4-cubic-metre bucket, entered service at Southern Urals Nickel’s Sakharinsk nickel mine. A similar machine will be commissioned this fall at the Buruktal nickel mine.

Over the next four years, Mechel plans to spend US$1.2 billion on big ticket items that will help the company boost iron and nickel output, as well as reach 25 million tonnes coal by 2010.

Earlier this summer, Mechel commissioned two other Liebherr excavators at the Krasnogorsk and Sibirginsk open-pit mines of its Southern Kuzbass Coal Co. Mechel plans to commission two more excavators at open-pit coal mines before the end of the year.

AMEC hires Borland to bolster fed lobby

Consulting and engineering firm AMEC (AMEC-L, AMCBF-O) has appointed William Borland as vice-president responsible for managing the delivery of environmental and engineering services to agencies in the federal government.

Borland has helped develop environmental policies and participated in numerous government committees on environmental issues. Borland will co-ordinate AMEC’s network of professionals across Canada.

“Bill Borland will be finding ways to get the government to be more supportive to both mining projects and eco-issues,” says John Kaegeorge, communications manager with AMEC. “Seen as the peacekeeper between bureaucrats and business, his new role will put him in the boxing ring with the two groups that seem to hate each other.”

Borland comes to AMEC from New Brunswick-based J.D. Irving, where he served 17 years as director of environmental affairs. Borland was responsible for more than 30 companies in numerous industrial sectors including forestry, civil construction, transportation, shipbuilding, and agriculture.

Borland was a founding director of the Atlantic Coastal Action Program (ACAP) Saint John, a non-profit charitable organization whose mission was to develop a comprehensive eco-management plan for the watershed area around Saint John.

Cabo to drill 7,000 metres for Richview

The Ontario division of Cabo Drilling (CBE-V, CBEEF-O) will soon be plying its trade on Richview Resources’ (RVR-T) Thierry property, near Pickle Lake, Ont.

Cabo has a contract to drill 7,000 metres of 47.6-mm-diameter core to confirm the dip strike continuity of known mineralization to 3,000 ft. below surface.

Most of the work will be done with a JKS Boyles BBS-56 diamond drill.

The drilling is part of an ongoing assessment of the Thierry deposit, which produced copper and nickel between 1976 and 1982.

An independent resource evaluation on Thierry was completed last year by P & E Mining Consultants.

In August 2006, tests by SGS Lakefield Research on material from Thierry produced a bulk concentration test recovering 95% of the copper and 71% of the nickel in a rougher concentrate. A full locked-cycle test on material grading 1.9% copper and 0.26% nickel, with trace platinum, palladium and gold, recovered 90.6% of the copper and 45-55% of the precious metals.

A February 2006 resource calculation tallied to 4.6 millio
n tonnes grading 1.8% copper and 0.2% nickel, using a 1.3% copper cutoff.

Richview also continues to explore the Headway gold project in Northwestern Ontario.

Cabo is headquartered in North Vancouver, B.C., and operates divisions throughout Canada and Central America.