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An integrated alumina reduction plant normally includes the facilities for making the anodes (or carbon paste), reduction, processing virgin metal through holding fumaces to a "semi-finished product" for export, e.g., via T-ingot, sheet ingot, or billet. Additionally, there are facilities for building or relining cells cutout after 3-1/2 to 10 years lifetime. The latter operations are negligible consumers of energy compared with the reduction operations.

2. Production Capacity for Primary Aluminum; USA, OECD, Japan and the World.

The distribution of aluminum smelting capacity around the world, by technology, is shown in Table 1. The statistics of capacities at the end of 1996 can be reviewed in the following layouts:

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Table 1.

Distribution of Primary Aluminum Smelters And Technologies Around The World

1996

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Energy sources within the regions USA-OECD-Japan as proportions of the Subtotal tonnage are given below.

Region
USA
OECD-Europe
Japan

Hydroelectric

15.6 42.3

Thermal

24.3

Nuclear

0.7
4.7

12.4
0.4

The distribution of energy sources shown above and in the more comprehensive list in Table 2 reveals that the USA is at a disadvantage with respect to OECD-Europe (because of inclusion of Canada which is 100% hydro). South America, Asia (excluding the Dubai, Bahrain and Eastern Europe) in the proportion of power from hydroelectricity. These proportions are 58, 98, 62, 72% respectively compared with USA at 38.3%. Within this grouping, additional capacity is likely to be added in the Persian Gulf States (fueled by gas from oil field) and Australia (fueled by thermal, soft brown coal).

Other statistics that affect the current and near term supply and pricing of standard 99.5% Al, include:

the inventory quoted on the London Metal Exchange (LME) currently about 844,000t but greatly diminished compared with 2 million tonnes two years ago.

this inventory, attributable to a release of 18 million tonnes Al/yr from the former CIS following the collapse of demand from the military machine there, prompted a "Memorandum of Understanding” (MOU) amongst many OECD countries and Russia such that about 10% of production was shut down in both regions to decrease inventories.

the world price of Al, (settled in U.S. $) is negotiated on the LME making Al a commodity.

While there has been some capacity restarted, the situation now is essentially..

USA at 84% capacity (not counting Troutdale)

Canada at 98% capacity

OECD-Europe excluding Canada, at 94% capacity

Rudolf Pawlek. Light Metal Age. p 8-26. Feb. (1996).

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Russia and previously adherent states (Eastern Europe) somewhat uncertain but estimate, 85%

China and India - (estimated at 85 and 90% respectively).

Oceania 100%

South Africa 94%

South America 99.2%

It would be expected that those potlines which are economically viable compared with the LME price of Al, in compliance with regional environment Al regulations, and with access to a market will restart within the next two years given the trend of increasing intemal consumer demand within Russia, Latin America. China and India plus normal expansion in developed nations.

1. Pricing of Aluminum and Sensitivity to Industrial Fuel Price Projections

The structure or synthesis of the operating costs for domestic primary aluminum (according to prices for energy in Table 3 of the Appendix of the "Statement of Work" by conventionally recognized components is detailed in Table 3. (Basis listed in Appendix of this report). This excludes the amortization of capital.

Unit energy was derived from the weighted composite for the technology mix specific to the United States smelters. That came to 6.89 DCkwh/lb Al and when converted to AC at 98% rectification efficiency, was 7.03 ACkwh/lb Al. The price of electric power contracted to smelters is given as 46% of that listed. Alumina, like aluminum is traded around the world as a commodity. A representative contract price is $200/1 although spot may vary from $180 to $225. Alumina is commonly traded at 12.7% (LME Al per tonne) Al,0,. Alumina sufficient to supply about 40% of domestic capacity is refined from imported bauxite onshore, a proportion about 10% greater than that for OECD-Europe (including Canada).

For this study, OECD-Europe and the USA can be treated as having similar proportions of alumina made within the regions, and having to import comparable proportions from the chief alumina producing countries. (1994: Australia, 30.7%; South America 12%, USA 11.6%, Jamaica, 7.7%, Russia 6.2%, India 4.8%, China 4.5%, Canada 2.8%). Alumina is produced in France, Germany, Greece, Ireland, Spain and the United Kingdom within the OECD-Europe. Like the USA, the rest is imported by long ocean hauls from Australia, Brazil, Jamaica or Equatorial Africa. Escalators on natural gas and fuel for occan, rail, and truck transport will impact the price of alumina at the smelter.

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