Alcoa and OJC RUSNANO Sign MOU - Analyst Blog

Aluminum giant, Alcoa Inc. ( AA ) and Open Joint Stock Company (OJSC) RUSNANO signed a Memorandum of Understanding (MOU) to produce technologically advanced oil and gas aluminum drill pipe finished with a life-extending antiwear coating. The life of the aluminum pipe is expected to be extended by 30% to 40% in aggressive and corrosive drilling environments with antiwear nano-coating compared to uncoated aluminum pipe.

Both Alcoa and RUSNANO propose to try out the potential application of a nanotechnology-based coating for the aluminum drill pipe to augment wear resistance in unfavorable corrosive drilling environments with the help of Alcoa Technical Center.

According to OJSC RUSNANO, complex oil and gas development projects need drilling equipment that have increased capabilities and the company stated that aluminum drill pipe with antiwear nano-coating will help in directional and deep drilling in aggressive, corrosive environments.

OJSC RUSNANO feels that by partnering with Alcoa it can create products that are unique for customers in the oil and gas industry. Alcoa, on the other hand, stated that with the expertise of RUSNANO, it can cater to the aluminum industry in Russia.

As per the MOU, Alcoa will leverage its Samara facility to produce aluminum drill pipe with hot fit tool joints for the country's oil and gas market. The capital will be provided by RUSNANO Capital, a subsidiary of OJSC RUSNANO.

OJSC RUSNANO was established in Mar 2011 through the reorganization of the Russian Corporation of Nanotechnologies State Corporation. OJSC RUSNANO implements the state nanotechnology policy of the development of the nanotechnology industry acting as the co-investor in nanotechnology projects with substantial economic or social potential.

Alcoa, which is among the prominent players in the mining industry along with Aluminum Corporation of China Limited ( ACH ), Atlatsa Resources Corporation ( ATL ) and BHP Billiton Limited ( BHP ), is a world leader with respect to production and management of primary aluminum, fabricated aluminum, and alumina as well as the world's largest miner of bauxite and refiner of alumina.

Alcoa released its first quarter 2013 results in Apr 2013. The company saw its profit surge roughly 59% in the quarter, buoyed by strong aluminum demand. It posted a profit of $149 million or 13 cents per share in the quarter, exceeding the profit of $94 million or 9 cents recorded a year ago. The results were driven by strong demand across the aerospace and auto markets.

Excluding one-time special items, Alcoa earned $121 million or 11 cents a share in the quarter, beating the Zacks Consensus Estimate by a penny and exceeding $105 million or 10 cents per share posted in the year-ago quarter.

Revenues declined roughly 3% to $5,833 million from $6,006 million in the year-ago quarter and were below the Zacks Consensus Estimate of $5,857 million. Sales were hurt by lower aluminum prices and reduced production in Alcoa's primary metals business in Europe.

Alcoa currently retains a short-term Zacks Rank #4 (Sell).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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