Aluminium production and usage is continuously trending upward the world over, as is aluminium recycling, yet Australia is having trouble employing any economies of scale to its advantage.
Australia is in a unique position when it comes to aluminium production, as we have major reserves of the bauxite which becomes alumina which becomes aluminium. State governments have seen the benefit in employment that manufacturing aluminium can bring, as well as export income, but increasingly questions are being asked about the future viability of the venture.
Current Concerns for the Aluminium Industry
Making aluminium from alumina consumes a lot of energy. When they were both in operation, Victoria’s two aluminium smelters were said to represent around one quarter of the state’s electricity consumption, in a state of five and half million people. The aluminium industry is dominated by continuous base load electricity demand – in 2009 the Australian aluminium smelting industry consumed 29,250 GWh of electricity. Additionally, the amount of water used throughout the process is extremely high and with Australia only now coming out of an extended country-wide drought, questions are continuously asked as to how the precious resource is best utilised.
To give an idea of the raw numbers, estimated bauxite production in Australia was 65 million tonnes in 2009. In the same year, China produced approximately 40 million tonnes and Brazil 28 million tonnes. This contrasts markedly with actual aluminium production, with China well out on its own with 17 million tonnes, then Russia and Canada on 4 and 3 million tonnes, with Australia lagging on 2 million tonnes.
In Australia, the aluminium industry directly employs 17,000 and brings in over $8 billion of export income per annum. This is mostly in alumina or crystalline form, which is the best way to extract value from the resource.
Bauxite miners and alumina miners on the Australian continent are BHP Billiton, Rio Tinto Alcan and Alcoa of Australia. Aluminium is smeltered by Rio Tinto Alcan, Alcoa of Australia and Hydro Aluminium. Local manufacturers who are downstream from mining and smelting include companies involved in with rolled products and extrusions, such as Capral, Extrusions Australia and Ullrich.
Almost 500 jobs recently ended at Alcoa’s Geelong aluminium smelter, which had not received any capital expenditure for many years and was only operating thanks to a favourable electricity deal with the state’s electricity providers. This deal was coming to an end soon, so Alcoa management’s hand was forced.
The Australian dollar is sky-high thanks to mining, which makes any of our value-adding efforts very difficult to export at inflated prices. All of the major power transmission players recognise the shift in the landscape also, and have invested in supplying conveyor equipment and drilling consumables.
The following is an excerpt from the Australian Aluminium Council…
“Australia’s world-class alumina and aluminium operations will continue to add value to Australia’s vast bauxite reserves and to underpin regional economies around Australia — provided that the international competitiveness of our industry is maintained, particularly in relation to the impact of government policy.”
What next for the Australian aluminium industry?