Our daily search for industry news over the past year has revealed that most of the growth of the aluminum industry has been occurring overseas. This has been the case for some time now. In fact, in 1995 the U.S. manufactured 17% of the world’s output and consumed 29%. By 2005, U.S. production is down to 8% while usage is 22%.

In order to keep our terminologies straight, it takes four tons of bauxite to produce two tons of alumina, resulting in one ton of aluminum metal. In 2007, China will overtake Australia to become the world’s top producer of alumina. Two alumina expansion projects have begun or will soon begin. The Chinese government, however, plans to take measures to prevent the country from becoming an alumina exporter. Worldwide alumina has been in a production deficit for the last several years and is expected to go into a surplus in 2007 with this increasing supply. The surplus is expected to last for the next two or three years when, by 2009, the supply is expected to become stable.

China is both the largest user and producer of aluminum metal. It is expected that Chinese demand for aluminum will again double in the next 15 years. Although the largest producer of aluminum, China has no expectation of exporting it in the near future due to the current production deficit. In fact, China is raising export taxes on primary aluminum to discourage export. The Aluminum Corporation of China (Chalco) has plans to spend around $2 billion by 2010 to more than double processing capacity.

Outside investment in the Chinese aluminum industry is effectively being discouraged by an absence of long-term power contracts. Alcan was mulling the prospects of an aluminum-sheet-producing plant late in 2006. They decided to curb their investment plan because power contracts will not be negotiated for more than one year.

The Middle East is also having a major impact on the aluminum industry. In 2000, the Middle East produced 5% of the world’s aluminum. Between 2000 and 2004, production was up 26% and is expected to increase another 50% by the end of 2007. In 2006, in spite of the Chinese influence, the production of aluminum in Arab countries accounted for 8% of the world’s production. This is expected to increase to 18% by 2015. One of the primary reasons for this is the abundant availability of inexpensive natural gas. Power costs account for upwards of 40% of the cost to produce aluminum.

The world’s largest aluminum plant is soon to be built in Abu Dhabi, United Arab Emirates. An aluminum fluoride plant is being built in Riyadh, Saudi Arabia, that will be operational late in 2008. Other Gulf States countries such as Qatar and Oman are also investing billions in aluminum smelters. Dubai Aluminum is developing an alumina refinery in India to be in production during the second half of 2009. For the country of Dubai, aluminum is the number two non-oil export. With so much aluminum activity in the Middle East, a significant annual aluminum trade show (Alumex) takes place in Dubai. A second – Aluminium Middle East – takes place in Bahrain.

We can clearly see that the aluminum industry is a global concern and countries far from North America will greatly affect this industry’s growth in the next decade and beyond. IH