Bloomberg reported that Alcoa Inc has suspended a proposed expansion of the Wagerup refinery in Australia as the global credit crisis curbs demand, driving prices of the metal down 40% from a record in July 2008.

Mr Alan Cransberg MD of Alcoa's Australian unit said that "The action taken was necessary given the current challenging economic environment. The expansion would have cost USD 4 billion. We are facing unprecedented economic challenges that require us to rein in capital expenditure and reconsider the timing of our capital projects.''

It may be noted that the world's largest producers of aluminum, iron ore and steel are cutting output and reviewing investment plans as the global economy slows and commodity prices decline.

United Co Rusal, the world's largest aluminum smelter, said last month that 75% of companies making the metal in China, Europe and the US were unprofitable. Chalco last week idled 38% of its alumina capacity on falling prices and demand.

China this week pledged a CNY 4 trillion stimulus plan to prop up growth as the world heads toward recession. Slowing economies have slashed demand for metals, damped prices and slowed exports. The funds will go toward low rent housing, rural infrastructure as well as roads, railways and airports.