There was no requirement in the work statement to assess Australia or New Zealand, also in the OECD, with total capacity of 1,700 Kt Al by 1997.

While the role and scope for reclaimed aluminum is discussed below, it may not be feasible to increase the supply of recyclable Al in USA and Europe to the extent of additional 4000 Kt over that projected for each region in Tables 9 and 10.

6. Market Situation-Aluminum Industry.

In contrast to the absence of greenfield primary aluminum plants within the USA since that at Mount Holly, SC (about 1980), factories that add value to Al, i.e., rolling, rod extrusion, plate, sheet and foil mills, and can manufacturing plants, have been both expanded and enhanced in capability in the USA.

Projections for the growth of product sectors comprising the main U.S. markets are given in Table 8. The overall annual growth rate expected by the industry is 3.5%. The greatest rate of growth is anticipated in the transportation sector where Al sheet, extrusions and castings find favor in decreasing weight and increasing fuel efficiency of vehicles. The can, building and construction, consumer durables sectors, although projected to grow at about 2% could be considered more mature markets. The data for actual 1996 are published by the Aluminum Association (May 1995, Aluminum, "Know the Facts"). The basis for Table 8 is included in the Appendix. Summary data from the table suggests that the need for Al for domestic consumption (excluding exports) will increase from 8474 Kt in 1996 to 9757 Kt (+ 15%) in 2000, to 11,400 Kt (+ 35%) in 2005, and 12.700 Kt (+ 50%) in 2010. Exports amount to an increment of 14-15% of the domestic demand and must be added to obtain total U.S. demand for Al alloys.

The sourcing of the metal accommodating these expansions in domestic manufacturing (it is tacitly assumed for this argument that the plant, equipment and manpower will be put in place when and where needed) is addressed in Table 9. On the basis that there will be no additional primary Al plants built in the U.S. (and that Troutdale may not restart), and the reasonable growth of recycling (listed in the basis for Table 9, Appendix), then to close the mass balance, excluding the 4000 Kt primary Al from U.S. smelting, the amount of Al from recycling and imports would be as follows:

According to this scenario, the rate of improvement in recycling decreases from 262 Kt/yr (+

George T. Haymaker, Journal of Metals, p 16-18, May 1996.

6.5% per annum) 1996 to 2008, to 94 Ktyr (+ 1.4 % pa) out to 2015 on the grounds that the asymptotic levels in this country for recycling used beverage cans (UBC's)/packaging and Al from transport/consumer durables may well be 80% and 75%. (In Sweden where there is a 15¢ deposit on a can, the recycle rate of UBC's is 90% - such civic response, is not a characteristic of the U.S. "throw-away" economy). Thus, the secondary Al plateaus around 2010 at approximately 47.5% of gross U.S. supply over which period, the relatively constant rate of imports-only about 700 Kt more than projected for 1996 and 2000- would have to increase from 26.5 ± 1.5% over the interval 2000 to 2010, to an estimated 4800 Kt, or 30% of the need within the USA in 2015.

Key questions arise:

What are the relative economics of reclamation compared with primary aluminum, onshore or offshore?

Would the U.S., in competition with OECD-Europe, continue to maintain 4000 Kt production of Al?

What, under comparable projections of market growth, sourcing of aluminum, might the projections show for availability of primary aluminum around the world, given the prevailing capacity of announced new smelters?

7. Projections in Dynamics of Primary Aluminum Demand and Supply

Projections for production and demand are outlined in Table 10 assuming the 46% proration of the power adders. The basis for the estimates are listed under the table. Conceding annual improvement of 0.5% from existing capacity at 100% utilization (from better control and minor operational enhancements), new smelters in, e.g., Canada and Norway adding 247 Kt Al by 2000, the growth for 2000 to 2015 in OECD-Europe would be from 7997 Kt to 8570 Kt. With a growth of 3.5%, the regional demand would increase from 9263 Kt in 1996 to 16,500 in 2015. The estimated recycle rate of 27% in 1996 was incremented at 1.5% per year driving the reclaimed supply of Al from 3500 Kt in 2000 to 5000 Kt in 2005, and thereafter at a slightly lesser rate to 6900 Kt in 2015. This scenario reveals that the supply of excess primary aluminum from OECD-Europe, approximately 850-900 Kt, would drop to zero in 2005. In 2010 and 2015 this region would need to import 200 Kt and 1000 Kt, respectively.

Meanwhile, with China (1890 Kt rated capacity) and India (675Kt rated capacity) representing potential growth in both production and consumption of Al products, it would be pure speculation on when or whether India might remain an exporter. China at present is not importing as much alumina as had been anticipated for 1996, which could indicate that there is an internal advantage at this time to curtail internal production and import Al. George Haymaker Jr. (Kaiser Aluminum Corporation) in addressing the 1996 Light Metal Conference, showed a graph indicating the rate of change in country's Al consumption per capita as a function of change in Gross Domestic Production ($ per capita). In developed nations, this was 0.84 lb Al /$1000 and in developing countries 2 lb Al /$1000. Thus if the U.S. GPD grew 2% the per capita consumption of Al would increase 105 million pounds (or 47.6 Kt Al). In comparison, in India and China where the GDP has been growing

reportedly at 10% +/year, the increase in the combined regional consumption could be (10% of $250/yr x 2 x 2 x 10° people x 10'), 10 lb Al or 46 Kt Al. These amounts are much lower than the 3.5% expected by the aluminum industry and projections according to that scenario in Table 11.

According to a recent release, China was expecting to increase total primary capacity from 1900 Kt to 2190 Kt by the end of 1996. By 2000 the combination of Chinese National Nonferrous Metals Corporation (CNNC) and private ventures were planning to install additional 1677 Kt of production (this compares with my estimate of 1519 Kt). But China exported only 200 Kt in 1995 so a high rate of internal processing ingot or consumption is anticipated.

46-495-31

Table 9.

Projected Consumption and Sourcing of Aluminum for U.S. Industries (Weights in Kilotonnes and Percentages)

(Basis: Aluminum Association 1995 & Annual Growth Factor, 3.5%)

AL-34

Projections of Production -- Demand Balance of Aluminum for OECD Countries

Primary production based on 1996 capacity with improvements of 0.5% per year + 247 kt in 2000.