The world aluminum industry—once a neat category whose single-minded firms, few plants, and clear trade patterns could be easily encompassed—has grown vastly in size and complexity in recent years. The most interesting development during 1968 has been the heavy concentration of new plants in precisely those industrial countries once viewed as prospective importers.
As demand in developed countries leaped forward and dependence on tropical bauxite supplies increased, the previous locational pattern of the industry was questioned. It once was supposed that the scarcity of new, low-cost hydroelectric power in the United States, Europe, and Japan would turn the industry to the unexploited hydro potentials of the less developed countries, thus moving away from markets toward raw material and power inputs. Although low electricity costs still exert some pull where political stability and investment climate are favorable, events of the year have demonstrated that developed countries continue to offer a promising environment for new smelters.
Perhaps the most dramatic evidence for this conclusion is provided by the United Kingdom. Not blessed with plentiful cheap hydroelectricity, the United Kingdom has been a negligible producer of primary ingot. Alone among major industrial countries, the British have relied mostly on imports, and their suppliers in Norway and North America have been encouraged by the absence of any tariff on primary aluminum. When the United Kingdom decided to examine the possibility of domestic production over the past year, they were deluged by proposals for new smelters. Britain soon will have three new plants with a capacity totaling 260,000 tons. One will rely upon domestic coal as its primary energy source, while the other two will draw power from government-owned nuclear stations. In the latter cases, the reduction plants will require about one-fifth of the capacity of the large nuclear reactors contemplated, thereby serving as important base-load customers for electricity while easing the problem of fitting such large generators into the electric power grid.
Somewhat less dramatic examples of the current locational trend are found in West Germany and Japan. Both have been producers of primary aluminum but are short of new low-cost hydropower. They, like the British, were viewed as prime markets for foreign metal as their domestic demand leaped ahead.
During the year, Germany was the scene of a surprising spate of new plant announcements; new plants of 170,000 tons capacity are scheduled and their future expansion to 500,000 tons is projected. Meanwhile existing facilities are being enlarged and it is rumored that the leading French firm also will build a plant in Germany. All of these plants initially are to depend upon local brown coal as the power source, but certainly nuclear-energy will enter the picture if all of the expansions materialize.
Japan long has been caught between high power costs and a policy favoring domestic production in basic industries. Apparently the Japanese have opted to press ahead with local production. By year end, additions to Japanese capacity of over 500,000 tons were in sight—more than double the existing plant. The added Japanese plant will employ a variety of energy sources, including coal, gas, and fuel oil.
At the same time, the Japanese have played an important role in the decision to proceed with the long studied smelter based on New Zealand Manapouri hydroelectric project. A consortium of Japanese, Australian, and American firms will build the plant which is eventually expected to exceed 200,000 tons. Although access to the Japanese market is a major element in the project, it does not appear, considering the domestic expansion noted above, that there will be any substantial change in Japanese supply strategy.
Elsewhere, it is more of the same. The American production continues to expand, based as before on coal, gas, hydro, and now, apparently, nuclear energy. Norway moves steadily toward completion of hydro facilities and the aluminum plants they support. An old project for Sardinia, once designed to use low-grade local coal and to uplift a depressed area, has been reincarnated as an oil burner. In Greece, a very ambitious project has been advanced for an industrial complex including aluminum reduction. Holland, Sweden, Australia, India, and Brazil join existing producers who for the most part are expanding in keeping with their markets.
The less developed countries have not fared especially well. The scattering of export smelters in these countries apparently will be joined by one in Angola, and Iran is to be the site of a regional plant serving that country and Pakistan. An interesting venture is that projected for Bahrein, where the local government, in combination with Western interests, will build a plant based on abundant local gas. However, these are moderate-sized projects which are swamped by the expansions in developed countries.
A version of this article appeared in print in the January 1969 issue of Resources magazine.
