Aluminum Cost Pressures To Keep Prices High - Mytilineos

ATHENS--High aluminum prices are likely to remain, driven by energy, transport and input costs, according to Evangelos Mytilineos, chairman and chief executive of Greece's Mytilineos Holdings.

Speaking Tuesday at Metal Bulletin's 13th bauxite and alumina conference in Athens, Mytilineos said energy costs are seen as structural, not cyclical, while those bauxite mines with alumina refineries located adjacent will dominate the cost curve.

In terms of inputs, the cost of resins and caustic soda will remain a key drive of aluminum prices.

Mytilineos said that aluminum demand will remain strong, with growth of 5% a year forecast until 2010.

There will be continued capacity constraint in refining and smelting, with China the "big swing factor" in supply as in demand, he noted.

Further capacity is planned in China, but the Chinese government is trying to regulate production to limit electricity consumption, he added.

Greece's aluminum industry represents some 1.6% of gross domestic product and 6% of total Greek exports. Primary aluminum consumption in Greece is around 300,000 metric tons a year.

Mytilineos, which owns a 47.55% stake in Aluminium of Greece, exports around 470,000 tons of alumina a year and sells around 105,000 tons of primary aluminum domestically each year. Its primary aluminum exports are some 60,000 tons a year.

Mytilineos also owns the Delphi Distomon bauxite mines, which have a capacity of 1 million tons a year and are currently producing at some 800,000 tons a year.

The company, which had a combined turnover of $1.5 billion in 2006, also has interests in energy, defence and EPC contracting.