China Dominates the Global Aluminium Industry

LONDON - Roskill Information Services

- The Economics of Aluminium (9th Edition)

- www.roskill.com/reports/aluminium

- New Report From Roskill Analyses Worldwide Aluminium Supply and Demand

China dominates the global aluminium industry accounting for one third of both world production and world consumption of primary aluminium. While China is self sufficient in aluminium metal and approaching self sufficiency in alumina, dependence on imported bauxite remains high despite rising output. However, power supply issues and high costs of production could result in declining production in the longer term and the possibility that China will become a net importer of primary aluminium.

Russia, Canada, the USA, Australia, Brazil, Norway and India are the principal producing countries after China. These countries together account for about three quarters of world output of primary aluminium.

Although some 200 smelters, half of which are in China, produce primary aluminium, 14 companies operating about 100 plants controlled over 60% of output in 2007. Consolidation of the Russian companies Rusal and Sual with Glencore in 2006 into UC Rusal, and the acquisition of Alcan by Rio Tinto in 2007 resulted in two aluminium producers comparable in size to Alcoa.

World aluminium output rose by between 0.15 and 12.2%py between 1994 and 2008, averaging 5%py. Growth averaged around 7%py after 2001 mainly due to explosive expansion in production in China. Output began to contract in the second half of 2008 and this accelerated in 2009, meaning that world aluminium production is likely to decline for the first time in fifteen years and by as much as 5%.

In 2009, almost fifty aluminium smelter projects, with a total capacity of 20Mtpy, were at various stages of development, but only 10, with a total capacity of 2.8Mtpy, were already under construction. For most of these projects, no decision with regard to timing had been finalised and the timetables of the others are under review. At the same time, most of the major producers are idling high cost and inefficient capacity in response to low demand and prices.

The earliest major project to come on line will probably be Qatalum in Qatar, which is likely to be a very low cost producer. During 2008, a new 300ktpy smelter started operations in Oman and UC Rusal restarted output in Nigeria.

Reported production (which excludes as much as 2Mt in China) of refined secondary aluminium and aluminium alloy amounted to about 8.8Mtpy in 2007, mainly in the USA, Japan, Germany and Italy. A further 3 to 3.5Mtpy of secondary aluminium is recovered directly into end-uses. US-based Aleris International, owned by Texas Pacific and, formed in 2004 by the merger of IMCO Recycling and Commonwealth Industries, is probably the world’s largest aluminium recycling company. Novelis, which acquired Alcan’s secondary facilities in the USA, and Hydro Aluminium North America are major aluminium recyclers. Used beverage cans are the largest source of scrap and raw material for secondary aluminium ingot.

Recovery in aluminium consumption to begin in 2010

Between 1998 and 2007, world primary aluminium consumption grew by a year-on-year average of 5.6% to reach 37.2Mt. After a fall of 5.3% in 2001, aluminium consumption increased by an average of 7.8%py up to 2007, largely driven by Chinese consumption, which increased by an average of 23.7%py over the same period. Chinese aluminium consumption is, by a sizeable margin, the largest in the world, having overtaken that in the USA in 2004. Japan is the third largest consuming country.

Total use of aluminium including all forms of secondary metal, amounted to about 51Mtpy in 2007, and was probably little changed in 2008. Consumption was divided regionally into about 44% in Asia and 27% each in Europe and the Americas, while the major markets for aluminium were transportation (14% of demand), construction (11%) and packaging (6%)

The Chinese market (almost 30% of the world total in 2007 and 2008) expanded by about 27% in 2007; Antaike estimates that it increased by about 8% in 2008 and will increase by 3% in 2009. In Europe, North America and Japan, demand will almost certainly fall in 2009 and will either level out or show minimal growth in 2010. The market will start to recover in the second half of 2010, and global growth of 4 to 5%, led by China, is likely in 2011. Average growth in the global aluminium market to 2013 will probably be about 2.6%py resulting in total demand of about 58Mt.

Large stock overhang depressing prices

The LME monthly average cash price for high grade aluminium fell from record high of US$3,070/t in July 2008 to US$1,329/t in February as LME stocks increased from 1.1Mt to 3.2Mt. There were signs that prices had bottomed out in March/April 2009, and had stabilised in a range between US$1,400 and US$1,500/t. Lower production and the end of ‘destocking’ is expected to stop or reverse the increase in inventories and push prices up to between US$1,500 and US$1,700/t by September or October 2009, and they may reach US$1,800t by year-end. In 2009, aluminium prices will probably average US$1,400 to US$1,450/t. The large stocks are expected to overhang the market until the slide in global demand is reversed, which most analysts expect to happen in early 2010.

In the early and mid 2000s, cash production costs for primary aluminium rose steeply to a global average of almost US$2,000/t, mainly because of increased alumina and power costs. Alumina prices have fallen with those of aluminium, but power costs remain high, and prices in early 2009 were less than the costs of many producers.

Electrical power and alumina are the most costly inputs in the production of primary aluminium. A secure, low cost and proximal supply of power is a more important factor than either nearby raw materials or markets, when deciding on a location for an aluminium smelter. The presence of large smelters in Bahrain, Dubai, Oman, South Africa, Mozambique and Iceland is evidence of this. Countries such as Canada and Norway take advantage of both plentiful hydroelectricity and nearby markets. New smelters are under construction in Abu Dhabi and Qatar to take advantage of gas resources.

Table of Contents Page 1 Summary 1 2 History, occurrence, properties and resources of 6 aluminium 2.1 History 6 2.2 Occurrence 7 2.3 Properties 7 2.4 Resources 9 3 Aluminium production processes, costs and 11 electricity usage 3.1 Production processes for primary aluminium 11 3.1.1 The Hall-Heroult Process 12 3.1.1.1 Anodes and cathodes 13 3.1.1.2 The smelting cell 14 3.1.2 Other processes 15 3.2 Primary aluminium production costs and 15 electricity usage 3.2.1 Electricity usage in primary aluminium 18 production 3.3 Environmental legislation 24 3.4 Secondary aluminium production processes 25 3.5 Semi finishing of aluminium 26 4 World production data for refined unwrought 27 aluminium 4.1 Primary aluminium world production data 27 4.1.1 Regional production data 32 4.1.1.1 Asia 34 4.1.1.2 Europe 35 4.1.1.3 North America 36 4.1.1.4 Oceania 36 4.1.1.5 South America 37 4.1.1.6 Africa 37 4.1.2 Primary aluminium producing companies 38 4.2 Secondary aluminium production data 43 4.2.1 Secondary aluminium producing companies 46 4.3 Outlook for primary aluminium production 47 4.4 World aluminium stocks 49 5 Aluminium production and processing by country 53 5.1 Abu Dhabi 53 5.2 Algeria 53 5.3 Argentina 53 5.3.1 Producers of aluminium in Argentina 54 5.3.1.1 Aluminio Argentino SAIC (Aluar) 54 5.3.1.2 Other companies 55 5.4 Armenia 55 5.5 Australia 55 5.5.1 Producers of aluminium in Australia 57 5.5.1.1 Rio Tinto Alcan 57 5.5.1.2 Alcoa of Australia Limited 59 5.5.1.3 Hydro 60 5.5.2 Aluminium projects in Australia 60 5.5.3 Secondary producers, remelters and 60 semi-manufacturers 5.6 Austria 61 5.7 Azerbaijan 62 5.8 Bahrain 62 5.9 Belgium 63 5.1 Bosnia-Herzegovina 64 5.11 Brazil 65 5.11.1 Producers of aluminium in Brazil 66 5.11.1.1 Aluminio Brasiliero S.A (Albras) 67 5.11.1.2 Consorcio de Aluminio de Maranhao (Alumar) 67 5.11.1.3 Compania Brasilieira do Aluminio (CBA) 68 5.11.1.4 Valesul Alumino S.A. (Valesul) 68 5.11.1.5 Alcoa Aluminio S.A. 68 5.11.1.6 Novelis do Brasil 69 5.11.1.7 Secondary producers and semi-manufacturers 70 5.12 Brunei 70 5.13 Cameroon 70 5.14 Canada 71 5.14.1 Primary production 72 5.14.2 Producers of aluminium in Canada 73 5.14.2.1 Rio Tinto Alcan 73 5.14.2.2 Aluminiere Alouette Inc 75 5.14.2.3 Aluminiere de Becancour (Albecour) 76 5.14.2.4 Alcoa Inc 76 5.14.3 Secondary aluminium production 77 5.15 China 77 5.15.1 Producers of aluminium in China 81 5.15.1.1 Aluminium Corp of China (Chalco) 85 5.15.1.2 Henan Yugang Longquan 87 5.15.1.3 Qingtongxia Aluminium Group 87 5.15.1.4 Yichuan Aluminium 88 5.15.1.5 Chiping Xinfa Huayu Aluminium 88 5.15.1.6 Mengdong Energy Group 88 5.15.1.7 Vimetco (Henan Zhongfu) 89 5.15.1.8 Qinghai Qiaotou Aluminium and Power 89 5.15.1.9 Yunnan Aluminium Company Limited 89 5.15.1.10 Henan Wanji Aluminium 90 5.15.1.11 Binzhou Weiqiao Aluminium 90 5.15.1.12 Henan Shenhuo Aluminium Power 90 5.15.1.13 East Hope 91 5.15.1.14 Guangyuan Qimingxing 91 5.15.1.15 Chongqing Xipeng Aluminium Industrial Park 91 5.15.1.16 Kam Kiu Aluminium Products 91 5.15.1.17 Panzhihua Pearl Aluminium 91 5.15.1.18 Baoding Longda Aluminium Industry 92 5.15.1.19 M.C. Nikkei Aluminium (Kunshan) 92 5.15.1.20 Shanghai Sigma Metals 92 5.15.1.21 UC Rusal/China Power Investment 92 5.16 Colombia 92 5.17 Croatia 93 5.18 Dubai (United Arab Emirates) 93 5.19 Egypt 94 5.2 Finland 94 5.21 France 94 5.21.1 Producers of aluminium in France 96 5.21.1.1 Rio Tinto Alcan 96 5.21.1.2 Secondary aluminium producers 96 5.22 Germany 97 5.22.1 Producers of aluminium in Germany 99 5.22.1.1 Trimet Aluminium 99 5.22.1.2 Hydro 99 5.22.1.3 Corus Aluminium Voerde GmbH 100 5.22.1.4 Aleris Recycling 101 5.22.1.5 Other producers 101 5.23 Ghana 102 5.24 Greece 102 5.24.1 Producers of aluminium in Greece 103 5.24.1.1 Aluminium de Grece 103 5.24.1.2 Other producers 104 5.25 Greenland 104 5.26 Hungary 105 5.27 Iceland 105 5.27.1 Producers of aluminium in Iceland 106 5.27.1.1 Alcan Iceland 106 5.27.1.2 Nordic Aluminium (Nordural) 106 5.27.1.3 Alcoa Fjaroaal 107 5.28 India 107 5.28.1 Producers of aluminium in India 109 5.28.1.1 Hindalco Industries Limited 110 5.28.1.2 National Aluminium Company Limited (Nalco) 112 5.28.1.3 Vedanta Resources 112 5.28.1.4 Jindal Steel Works 113 5.28.1.5 Ashapura Minechem 114 5.28.1.6 Larsen & Toubro 114 5.28.1.7 Other producers 114 5.29 Indonesia 116 5.3 Iran 117 5.31 Italy 118 5.31.1 Producers of aluminium in Italy 119 5.31.1.1 Alcoa Italia SpA 119 5.31.1.2 Secondary aluminium smelters, remelters and 119 extruders 5.32 Japan 121 5.32.1 Producers of aluminium in Japan 122 5.32.1.1 Nippon Light Metal Company (NLM) 122 5.32.1.2 Daiki Aluminium 123 5.32.1.3 Nikkei MC Aluminium 123 5.32.1.4 Asahi Seiren 124 5.32.1.5 Other producers 124 5.33 Kazakhstan 125 5.34 South Korea 126 5.35 Libya 127 5.36 Malaysia 127 5.37 Mexico 128 5.38 Montenegro 130 5.39 Mozambique 130 5.4 Netherlands 131 5.40.1 Producers of aluminium in Netherlands 131 5.40.1.1 Corus Primary Aluminium 131 5.40.1.2 Klesch & Co 132 5.40.1.3 Other companies 132 5.41 New Zealand 133 5.42 Nigeria 133 5.42.1 Aluminium Smelter Company of Nigeria (Alscon) 133 5.42.2 Other companies 134 5.43 Norway 134 5.43.1 Producers of aluminium in Norway 136 5.43.1.1 Hydro A/S 136 5.43.1.2 Elkem Aluminium 137 5.43.1.3 Sor-Norge Aluminium (Soral) 138 5.43.1.4 Other companies 138 5.44 Oman 138 5.45 Poland 138 5.45.1 Aluminium Konin-Impexmetal 139 5.45.2 Remelters and secondary aluminium smelters 139 5.46 Qatar 140 5.47 Romania 141 5.48 Russia 142 5.48.1 UC Rusal 143 5.48.2 Secondary producers, remelters and fabricators 146 5.49 Saudi Arabia 147 5.5 Slovakia 147 5.51 Slovenia 148 5.52 South Africa 150 5.52.1 Billiton Aluminium SA 150 5.52.2 Coega project (Rio Tinto Alcan) 151 5.52.3 Other projects and companies 152 5.53 Spain 152 5.53.1 Producers of aluminium in Spain 153 5.53.1.1 Alcoa Spain 153 5.53.1.2 Secondary smelters and remelters 154 5.54 Suriname 154 5.55 Sweden 155 5.56 Switzerland 156 5.57 Taiwan 156 5.58 Tajikistan 157 5.59 Trinidad and Tobago 158 5.6 Turkey 158 5.60.1 Producers of aluminium in Turkey 159 5.60.1.1 Eti Alűminyum AŞ 159 5.60.1.2 Processors and secondary producers 159 5.61 Ukraine 160 5.62 UK 161 5.62.1 Producers of aluminium in the UK 162 5.62.1.1 Alcan Smelting & Power 162 5.62.1.2 Anglesey Aluminium 162 5.62.1.3 Secondary aluminium 163 5.63 USA 163 5.63.1 Producers of primary aluminium in USA 167 5.63.1.1 Alcoa Inc 168 5.63.1.2 Century Aluminium Corporation 170 5.63.1.3 Columbia Falls Aluminium 171 5.63.1.4 Kaiser Aluminium Corporation 171 5.63.1.5 Northwest Aluminium 171 5.63.1.6 Ormet Corporation 172 5.63.1.7 Norandal USA 172 5.63.1.8 Rio Tinto Alcan 173 5.63.2 Producers of secondary aluminium in USA 173 5.63.2.1 Aleris Recycling 175 5.63.2.2 Novelis 175 5.63.2.3 Hydro 176 5.64 Venezuela 176 5.64.1 Producers of aluminium in Venezuela 177 5.64.1.1 Industria Venezolana de Aluminio CA (CVG 177 Venalum) 5.64.1.2 Aluminio del Caroni SA (CVG Alcasa) 177 5.64.2 Secondary production 178 5.65 Vietnam 178 6 World consumption of aluminium 179 6.1 Consumption of primary aluminium 179 6.1.1 Consumption of primary aluminium by country 179 6.1.2 Consumption of primary aluminium by region 184 6.1.2.1 Asia 186 6.1.2.2 America 187 6.1.2.3 Europe 187 6.1.2.4 Other regions 187 6.2 Total aluminium consumption 187 6.3 Consumption of aluminium by use 190 6.4 Consumption of aluminium by product 193 6.4.1 Aluminium flat rolled products 196 6.4.2 Cast aluminium 198 6.5 Outlook 200 7 Uses of aluminium 202 7.1 Use of aluminium in transport applications 206 7.1.1 Motor vehicles 209 7.1.2 Railways 222 7.1.3 Aerospace 224 7.1.3.1 Commercial aerospace 225 7.1.3.2 Military aerospace 228 7.1.3.3 Aluminium aerospace alloy developments and competing materials 230 7.1.4 Marine 232 7.1.5 Other transport applications 233 7.1.6 Outlook for aluminium demand in transport 233 7.1.6.1 Motor vehicles 233 7.1.6.2 Aerospace 235 7.1.6.3 Marine and railways 236 7.2 Use of aluminium in building and construction 237 7.2.1 World markets for aluminium in construction 238 7.2.2 Outlook for consumption of aluminium in 242 construction 7.3 Use of aluminium in electricity and electronics 243 7.3.1 Electricity transmission and distribution 243 7.3.2 Telecommunications 245 7.3.3 Building wiring 245 7.3.4 Winding wires and electrical equipment 246 7.3.5 Electronics 246 7.3.6 Outlook for the use of aluminium in electrical 247 applications 7.4 Aluminium use in containers and packaging 248 7.4.1 Beverage cans 250 7.4.1.1 Markets for aluminium in beverage cans 252 7.4.2 Other forms of aluminium packaging 257 7.4.3 Recycling of packaging materials 259 7.4.4 Outlook for the use of aluminium in packaging 261 7.5 Machinery and equipment 262 7.6 Consumer durables 263 7.7 Other uses 265 7.7.1 Metallurgy 266 7.7.1.1 Steel refining 266 7.7.1.2 Steel alloying 271 7.7.1.3 Aluminothermic reduction 272 7.7.1.4 Galvalume and Galfan 272 7.7.2 Batteries 273 7.7.3 Hydrogen storage 273 7.7.4 Semiconductors 274 7.7.5 Other applications 274 8 Analysis of international trade data for 277 aluminium 8.1 International trade in unwrought aluminium 277 8.1.1 Exports of unwrought aluminium 277 8.1.2 Imports of unwrought aluminium 282 8.2 International trade in semi finished aluminium 286 products 8.2.1 Exports of semi finished aluminium products 286 8.2.2 Imports of semi finished aluminium products 291 8.3 International trade in aluminium scrap 295 8.3.1 Exports of aluminium scrap 295 8.3.2 Imports of aluminium scrap 300 9 Prices of aluminium and aluminium alloy 304 9.1 London Metal Exchange 304 9.1.1 Aluminium products sold under LME contracts 306 9.1.2 LME pricing 306 9.1.2.1 Historic trends in aluminium prices on the LME 307 9.2 Chinese aluminium markets 319 9.3 Secondary and scrap aluminium prices 320 9.4 Outlook for aluminium prices 321

The Economics of Aluminium (9th Edition 2009) is available at GBP2400 / US$5000 / EUR4000 from Roskill Information Services Ltd. 27a Leopold Road, London SW19 7BB, England. Email: info@roskill.co.uk www.roskill.com/reports/aluminium

Source: Roskill Information Services

The Economics of Aluminium (9th Edition 2009) is available at GBP2400 / US$5000 / EUR4000 from Roskill Information Services Ltd, 27a Leopold Road, London SW19 7BB, England. Tel: +44-20-8944-0066 / Fax +44-20-8947-9568 Email: info at roskill.co.uk https://www.roskill.com/reports/aluminium