Aluminum Smelters Look Eastward

The aluminum smelting industry, long dominated by North America and Europe, is steadily shifting its weight to the Mid- East, Africa and Asia in search of low-cost electric power and the mass markets of the future, says Alcan Inc. chief executive Richard Evans.

China dominates global aluminum, a market of 35 million tonnes annually, up from 25 million tonnes in 2001. But Mr. Evans said yesterday Quebec has a "unique opportunity" to hold its ranking because of its hydro power and the technology base Alcan will develop in the Saguenay.

Canada, with hydro-rich Quebec and British Columbia, only a decade ago rivalled the United States and Europe in primary aluminum production. Since then China, with 1.2 billion people, has staged history's fastest economic takeoff with annual growth of 10%. It's the biggest producer and consumer of aluminum.

Alcan will go on investing heavily in the new, low-cost energy areas of the Mid-East, Africa and Asia to compete in future market growth, Mr. Evans said. "But we're determined to develop our Canadian smelting base further and hold the leadership in energy-saving technology ... that's the key to our $1.8-billion U.S. investment in the Saguenay."

The numbers add drama to global aluminum's story. In 1995, the United States made up 17% of world output, Canada 11%, Russia 16%, Europe 16%, Latin America 10% and China 9%.

By 2005 the U.S. share was down to 8%, Canada 9%, Russia 13%, Europe 14%, Latin America 7% while China jumped to 25%.

Last week, Alcan and Quebec announced a long-term partnership to build a US$550- million pilot plant with 60,000 tonnes capacity at Jonquiere to test the company's new AP50 smelter process technology. It will save energy consumption, reduce emissions and raise productivity.

That's the first step in a US$1.8-billion (current cost) 10-year investment program that should create 740 skilled jobs and add a further 390,000 tonnes of new capacity. Almost all of Alcan's Saguenay operations are based on its own captive hydro power.

Engineering starts soon and construction of the pilot plant starts in 2008 for a 2010 startup. The additional 390,000 tonnes of capacity will be completed by 2015.

Quebec is providing a 30-year, $400-million interest-free loan, research tax credits and other benefits including extended water leases and 225MW of new power that will assure 2,600MW through 2045.