# Aluminium



## greggles (17 April 2018)

I notice the aluminium price is at five years highs, currently US$1.08/lb. Can anyone suggest which ASX-listed companies are most likely to benefit from this?


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## Ann (9 March 2019)

*High Purity Alumina stocks on the ASX: The Ultimate Guide*
_"As with lithium and other battery minerals, new markets are rapidly opening up for materials such as high purity alumina (HPA), propelled by the influx of high-tech industries emerging on the world stage."_

Also there are a few stocks listed under 'Aluminum' in the AFR are as follows:
ATC, AWC, ABX, BAU, CAA, MMI, PBX.

Here is an incomplete 15 year quarterly chart for High Grade Aluminum currently the price is sitting just below a support line of around 1900, it will be interesting to see where the price sits at the end of March. I shall revisit the chart at the end of March.


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## sptrawler (9 March 2019)

The problem with aluminium is it is energy intensive, and the cost of energy is increasing, so is the demand for aluminium as vehicle manufacturers try to reduce weight.
So IMO the price of alumina stocks will keep rising, I picked up AWC and S32 recently.


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## Smurf1976 (10 March 2019)

sptrawler said:


> The problem with aluminium is it is energy intensive



That's an understatement..... 

The electricity needed to produce just one tonne of aluminium would run the average Australian house for about 3 years.


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## sptrawler (10 March 2019)

Smurf1976 said:


> That's an understatement.....
> 
> The electricity needed to produce just one tonne of aluminium would run the average Australian house for about 3 years.



Yes smurph, but the cost of production, will cause more smelters to close, this in turn will constrict supply.
Whereas the demand will rise, as the auto industry will have to make cars lighter, especially as we move toward EV's they will have to be lighter to conserve battery energy.
So the demand for aluminium goes up, the supply falls off, can only lead to one outcome. IMO
Eventually when autonomous cars are mainstream, plastic will be the main component it E.V's, as structural strength and safety won't be an issue. Then I guess aluminium demand will fall away, as I said, just my thoughts.


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## Ann (10 March 2019)

sptrawler said:


> Yes smurph, but the cost of production, will cause more smelters to close, this in turn will constrict supply.
> Whereas the demand will rise, as the auto industry will have to make cars lighter, especially as we move toward EV's they will have to be lighter to conserve battery energy.
> So the demand for aluminium goes up, the supply falls off, can only lead to one outcome. IMO
> Eventually when autonomous cars are mainstream, plastic will be the main component it E.V's, as structural strength and safety won't be an issue. Then I guess aluminium demand will fall away, as I said, just my thoughts.



If it is going to be aluminum v plastic, which is the better for recycling? I would have thought aluminum. Now that the environmentalists have got the ear of big business and the politicians they will begin to dictate ever more of the green agenda and responsible recycling will play a big role in this. China no longer wants our recyclables so it will fall back into our own back yard. Refined aluminum has value, used plastic is a liability.


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## sptrawler (10 March 2019)

Ann said:


> If it is going to be aluminum v plastic, which is the better for recycling? I would have thought aluminum. Now that the environmentalists have got the ear of big business and the politicians they will begin to dictate ever more of the green agenda and responsible recycling will play a big role in this. China no longer wants our recyclables so it will fall back into our own back yard. Refined aluminum has value, used plastic is a liability.



If cars can be made out of recycled plastic and be continually recycled, it solves the issue of what to do with waste plastic.
The reason cars currently aren't made of plastic, is due to structural strength and safety issues, this wont be an issue when cars are electric and drive autonomously.


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## Ann (10 March 2019)

sptrawler said:


> If cars can be made out of recycled plastic and be continually recycled, it solves the issue of what to do with waste plastic.
> The reason cars currently aren't made of plastic, is due to structural strength and safety issues, this wont be an issue when cars are electric and drive autonomously.



I think recycling anything is awesome, it would all come down to cost, I should think. What is cheaper to recycle aluminum or plastic? I would have no idea but it could be worth a look. It might give us a view of the future. How many times can aluminum be recycled and how many times can plastic be recycled? What will become land fill first? Just some rhetorical questions for interest, unless someone actually knows the answer?


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## sptrawler (10 March 2019)

Ann said:


> I think recycling anything is awesome, it would all come down to cost, I should think. What is cheaper to recycle aluminum or plastic? I would have no idea but it could be worth a look. It might give us a view of the future. How many times can aluminum be recycled and how many times can plastic be recycled? What will become land fill first? Just some rhetorical questions for interest, unless someone actually knows the answer?



I think the energy and time involved in extruding plastic car bodies, would be much less than that required to make the current steel and aluminium chassis/body configuration, it is certainly an interesting time in our history.


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## Smurf1976 (10 March 2019)

Plastics I don't know much about in a technical sense beyond saying that energy resources are the actual raw material. Plastics in common use originate largely from ethane (a minor component stripped out of natural gas) and various liquids distilled from crude oil. 

So energy is literally the raw material there - if it wasn't used to make plastic then the ethane can be left in the gas and burned (which is the actual practice with what the plastics industry doesn't use), petroleum liquids ultimately end up as fuel, etc. 

So whilst plastics don't use much energy to extrude etc, they quite literally are energy resources in their composition. 

In contrast aluminium takes a huge amount of heat (from fuel - gas usually) to get from bauxite to alumina which is the "half way" stage of production. It then takes a truly massive amount of electricity to turn that alumina into refined aluminum metal.

Those things are all typically done at different locations. Mine the bauxite where it exists. Turn that into alumina somewhere that lots of fuel is available cheaply which often isn't near the mine. Then turn the alumina into metal somewhere that electricity is available cheaply and that's typically not near where the alumina is made or where the ore is mined.

From a recycling perspective, the often quoted figure is a 95% energy saving to recycle aluminium since you're just melting it down and casting it again, you don't have to repeat the hugely energy intensive steps of refining.

Where that fails is, of course, if the recovered aluminium is too contaminated with whatever to simply be reused. If you've got to refine it again then you're up for a lot more energy yes.

If you're going to invest in aluminium companies then look into their energy supply - that's their single biggest cost (bigger even than labour usually) and the factor which will determine profit versus loss more than anything else. No cheap electricity = game over for smelters and quite a few, including two in Australia in recent years, have ended up in that situation. No cheap fuel = same outcome for alumina refineries and the one at Gove (NT) is gone largely for that reason.

There's also an emerging push toward "green" aluminium as a differentiated product. RioTinto Alcan have done some deals with end users on that basis recently, Nestle would be one of the better known end users with such an arrangement, and it's a concept that has been around for quite some time particularly within the hydro power industry (at the global level the hydro and aluminium industries are heavily related, either by long term contracts or outright ownership, due to the huge power needs of the smelters). So that's trying to create a separate market for aluminium produced from renewable energy - it's a concept that potentially may appeal to the manufacturers of consumer products for image / marketing reasons.


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## Ann (10 March 2019)

Smurf1976 said:


> There's also an emerging push toward "green" aluminium as a differentiated product. RioTinto Alcan have done some deals with end users on that basis recently, Nestle would be one of the better known end users with such an arrangement, and it's a concept that has been around for quite some time particularly within the hydro power industry (at the global level the hydro and aluminium industries are heavily related, either by long term contracts or outright ownership, due to the huge power needs of the smelters). So that's trying to create a separate market for aluminium produced from renewable energy - it's a concept that potentially may appeal to the manufacturers of consumer products for image / marketing reasons.




So in effect where an aluminum company also owns or is affiliated with renewables such as hydro, this then classifies the Aluminum as 'green'? Am I understanding you correctly Smurf? So far is Rio the only company with 'green' Aluminum listed in Australia? (My goodness you are an amazing fund of information!)


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## Smurf1976 (10 March 2019)

Ann said:


> So in effect where an aluminum company also owns or is affiliated with renewables such as hydro, this then classifies the Aluminum as 'green'?



Practical examples for two Australian smelters:

1. Tomago Aluminium is located in NSW and sources electricity under contract from AGL (ASX: AGL). 

Tomago has a complex ownership structure but RioTinto Alcan is the operator and majority owner (51.55%).

AGL generates the vast majority of this electricity from the Bayswater and Liddell power stations in NSW, both of which use conventional technology and are fueled by coal.

As such, aluminium produced by Tomago has a relatively high emissions "footprint" on account of the emissions arising from the electricity used, albeit generated by an unrelated company.

2. Bell Bay Aluminium is located in Tasmania and sources electricity under long term contract from Hydro Tasmania (not listed, being 100% state government owned).

Bell Bay Aluminium is owned by Pacific Aluminium, itself 100% owned by RioTinto Alcan.

Hydro Tasmania generates the vast majority of its electricity from 30 hydro-electric power stations and two wind farms in Tasmania, and most of the rest from a high efficiency gas-fired plant.

As such, aluminium produced by Bell Bay Aluminium has a relatively low emissions "footprint" since the electricity used, generated by an unrelated company, has a very low emissions intensity. To the extent that Bell Bay Aluminium does have emissions it's primarily from incidental aspects - the anode blocks which all smelters use in production do emit some CO2, emissions from shipping and so on but overall it's at the low end compared to the aluminium industry globally.

Now if a company which purchases aluminium has a desire to market themselves as "green" then they may seek to source materials from low emissions suppliers as part of that. Zero difference in the product, aluminium is aluminium, but they can claim to be doing their bit for the environment by choosing one supplier over another. Same concept as a company saying they won't accept child labour being used on farms and things like that.

The concept is in its infancy but Nestle has a contract with RioTinto Alcan which requires that the aluminium supplied to Nestle is from low emissions sources. Both companies have made some announcements regarding it.

RioTinto Alcan has options with where to source that from since they are also the majority owner of the Tiwai Point smelter in NZ which sources electricity under contract with Meridian Energy (a listed company). Meridian generates this power from various hydro and wind farm operations in NZ and so, as with Bell Bay Aluminium, has a low emissions intensity.

The basic concept behind this is the notion that companies, particularly those with a brand image to protect, maybe willing to pay a premium price for materials sourced in a manner which results in a lower environmental impact. For purely commercial reasons those smelters able to do that, and also their electricity suppliers, are keen on the concept since it improves their viability (and increases the bargaining position of the power supplier also).

To put the costs into perspective, it is widely rumoured in the energy industry that the Tiwai Point deal with Meridian, which was extended last year, is priced at about NZD 55 per megawatt hour (MWh). I don't think either company has confirmed it but it sounds about right, it's the sort of number that you'd expect.


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## Ann (10 March 2019)

Smurf1976 said:


> The basic concept behind this is the notion that companies, particularly those with a brand image to protect, maybe willing to pay a premium price for materials sourced in a manner which results in a lower environmental impact. For purely commercial reasons those smelters able to do that, and also their electricity suppliers, are keen on the concept since it improves their viability (and increases the bargaining position of the power supplier also).



That sounds like a win/win. Although I am not sure Nestles has a name it wants to protect, more like it is trying to lift its image from years of negative publicity. 
*Nestlé under fire for marketing claims on baby milk formulas *



Smurf1976 said:


> To put the costs into perspective, it is widely rumoured in the energy industry that the Tiwai Point deal with Meridian, which was extended last year, is priced at about NZD 55 per megawatt hour (MWh). I don't think either company has confirmed it but it sounds about right, it's the sort of number that you'd expect.



How much is the standard $ per megawatt power by comparison?


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## Smurf1976 (10 March 2019)

Ann said:


> How much is the standard $ per megawatt power by comparison?



Household consumption including distribution fees, GST, retail margin etc will be in the $200 - $450 range generally depending on state and which retailer. Lower rates for intermittent off-peak supply (water heating etc).

At the wholesale level here's the annual averages for Victoria going back to 1999 rounded to the nearest whole dollar:

1999 = 25, 26, 45, 31, 28, 25, 28, 32, 55, 47, 42, 36, 27, 27, 57, 51, 30, 46, 67, 92 and for 2019 to date it's running at 115.23

At AUD $2636 per tonne and paying $60 per MWh for electricity that's $900 worth of electricity to produce that tonne of aluminium or in other words one third of total revenue for the smelter goes straight to the electricity supplier. 

That's about the limit economically given you've got to add wages, cost of the alumina, cost of other raw materials such as pet coke, cost of building the smelter in the first place, shipping etc on top and then you'd expect at least some profit.

Needless to say, if the smelters can't get future contracts at that sort of level, if those contracts are priced to reflect the higher prices in the spot market, well then the smelters in Australia won't be viable to continue.

So the basic point in all this is that from an economic and investment perspective, if you're going to invest in aluminium production then make damn sure the company has access to lots of electricity (aluminium smelters) or fuel (alumina refining) and can get it reasonably cheaply since that's their biggest cost by far.


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## Ann (11 March 2019)

Smurf1976 said:


> At AUD $2636 per tonne and paying $60 per MWh for electricity that's $900 worth of electricity to produce that tonne of aluminium or in other words one third of total revenue for the smelter goes straight to the electricity supplier.






Smurf1976 said:


> Needless to say, if the smelters can't get future contracts at that sort of level, if those contracts are priced to reflect the higher prices in the spot market, well then the smelters in Australia won't be viable to continue.




Do these companies attract government subsidies? I tend to remember Victoria gave Alcoa smelter a huge subsidy to keep them in Victoria.


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## galumay (11 March 2019)

Yes, power for smelters in NZ and Aus have been able to negotiate massive discounts on power costs. Due to the lack of transparency its hard to tell whether there is any cost benefit or not. (to the public.)


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## Ann (1 May 2019)

High grade Aluminium on the monthly chart has fallen below that central line of support and is heading down to that rising support line coming from February 2009.


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## Ann (19 May 2019)

*U.S. Steel, Aluminum Makers Bounce Off Lows on USMCA Optimism*

_U.S. steelmakers and aluminum producers rebounded off Friday’s lows on optimism that North American allies will implement stronger measures that will prevent excess supply from flooding their domestic markets.

The Trump administration is poised to lift steel and aluminum tariffs on Canada and Mexico in favor of stronger enforcement actions, according to people familiar with the matter. The move helps clear the way for the ratification of USMCA which replaces the old North American Free Trade Agreement.

A S&P gauge of 13 steelmakers pared losses to 1.9% at 11:23 a.m. in New York. The index was down as much as 3.3 percent earlier. Alcoa Corp., the largest U.S. aluminum producer, was down 0.8 percent, after sliding as much as 2.4 percent earlier. More..._


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## Ann (6 June 2019)

I found this interesting...profiteering?...

*A 100% Surge in Aluminum Price Premium Has Brewers and Bottlers Asking Why*

_Donald Trump’s trade wars are increasing scrutiny of an obscure process that has boosted how much U.S. beer makers and bottlers pay for aluminum cans._

_The chairman of Molson Coors Brewing Co. and a bottler for PepsiCo Inc. are urging the U.S. government to investigate the process used to set benchmark aluminum premiums, which have doubled from 2017 levels in the wake of U.S. import tariffs. And the companies may have an ally in Commerce Secretary Wilbur Ross, who says the jump probably isn’t justified._

_

_

.....and then when you look at the chart for High Grade Aluminium it is nothing like the previous chart...


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## Dona Ferentes (31 October 2020)

Leave this to the trading houses, I think









						China’s aluminum juggernaut may be running out of road
					

China’s giant smelter sector churned out an average 105,000 tonnes per day in September, with year-to-date production up 3.3% on 2019.




					www.mining.com


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## frugal.rock (31 October 2020)

Rio Tinto invests $51m in Canadian alumina refinery
					

Upgrades, to be completed in early 2021, include three new energy efficient buildings and a centralized control room.




					www.mining.com


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## wayneL (31 October 2020)

A bit of a long term view of Ali in AUD terms for context with least squares trend and 2SD applied. Notwithstanding the overall volatility, pretty weak trend over these ~35 years, of which current price is fairly near.... FWIW.

I kinda like commodity plays at or near "minimum value". Of course, further shorter term analysis can be applied, but I like to stand back to see if there are bottom drawer opportunities.


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## sptrawler (1 November 2020)

Long term IMO, it is difficult to think Ali will not be just as important as batteries, in BEV development.
To get the range, it will be cheaper to reduce the weight, than improve the batteries.
Just my opinion.


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## mullokintyre (7 September 2021)

Aluminium prices shot up over the past few days to the highest in a decade  following a coup in Guinea.
Guinea exported 82 million tons of Bauxite in 2020, which places it at no 2 behind Australia.
Mick


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## divs4ever (8 September 2021)

Aluminum Hovers at Decade High as Guinea Coup Fuels Supply Angst









						Aluminum Hovers at Decade High as Guinea Coup Fuels Supply Angst By Bloomberg
					

Aluminum Hovers at Decade High as Guinea Coup Fuels Supply Angst




					www.investing.com


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## rederob (10 February 2022)

New record price set for aluminium:



In anticipation of the trend continuing I added more S32, even though it's not yet producing:
"*South32** Chief Executive Officer, Graham Kerr said “We are excited to participate in the restart of the Alumar smelter using 100% renewable power. With the smelter benefitting from existing infrastructure, access to our own supply of alumina and long-term green energy sources, we expect our investment to deliver strong returns through the cycle."*​


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## Dona Ferentes (15 February 2022)

from a Bloomberg article ...

_On the London Metal Exchange, spot prices for the metal have surged above $US3300 ($4630) a metric ton for the first time since June 1988. Worse, manufacturers are paying eye-watering *surcharges above the LME price to get hold of physical metal. *For example, European consumers of billets – a widely traded form of aluminium – face a premium of about $1500 per ton, four times higher than the average from 2000 to 2020._



> _Since 2005, China has accounted for virtually all the world’s incremental aluminium smelting capacity, reaching a global share of almost 58 per cent in 2021 in a market of 67 million tons. China isn’t growing its smelting capacity any more because Beijing is trying to reduce both energy consumption and carbon-dioxide emissions. Last year, China actually forced dozens of smelters to cut output to conserve electricity as the country faced shortages. In Europe, some smelters also cut production in late 2021 due to ultra-high electricity prices. Their return will depend on natural gas and power prices in Europe._


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## Sean K (6 March 2022)

Wondering why S32 has gone nuts the past year? They have a few commods, including this one.

I suppose this applies to most commods at the moment.


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## rederob (24 March 2022)

I'm tipping Aluminium to breach US$4000/tonne this year.
I'm presently searching for when inventories were so low.
Regardless, warehouse drawdowns suggest LME won't last 6 months.
Depending on what happens with Russian supply in coming weeks, there is a chance my target price is hit many months earlier.
Hopefully on the weekend I can pull some useful data to post.


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## qldfrog (24 March 2022)

Anyone can enlighten me vs the story of Australia not shipping alumina to Russia?
Is it just me but are we not the sucker there?
Russia is 80% self sufficient in alumina and nevertheless is producing for the world market, not for Russia
So we breach our contracts preventing our sale of alumina, to a country which does not need it anyway as they are supposedly not able to sell russian aluminium?
The European smelters will just buy more russian gas and oil at a higher price to produce aluminium for the west using more expensive ore....
So we barely hurt Russia but ensure aluminium gets more expensive...
If the Aluminium price increases by more than 20%, then the Russian sales to ...China now.. will ensure a net win for Russia...?
With strategies like that..


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## rederob (9 April 2022)

Another weekend passed, but *this* is up to date and relevant.
From the publication we see this regarding the impact from EV production:


And a slightly different perspective from the chart below: in 5 years time EV use of aluminium will be equal to Russia's total annual output:


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## Ann (30 April 2022)

Aluminum Orders Stall as U.S. Buyers Fear Looming Recession​
(Bloomberg) -- Aluminum buyers in the U.S. are holding off inking new orders over fears that rising inflation and crumbling supply chains may spark a recession.

Spot deals have taken a breather in recent weeks as Russia’s invasion of Ukraine added increased uncertainty in a market already facing long wait times and weakening demand, according to several people who trade the lightweight industrial metal. Buyers continue taking delivery of their contracted metal, but recent economic gauges have people worried enough to hold off purchasing extra for their shipments.

Read the rest of the article here...

Looking at the Aluminium price chart I have to ask will it yet again bounce back up off the 200dma? I am really liking the look of the chart shape.




hold AWC, A4N


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## divs4ever (30 April 2022)

i see rising energy costs  as the main worry  with aluminum  ALTHOUGH , Russia has a fair influence over aluminum production  and MIGHT consider  a bit of export restrictions of their own  ( to go with the oil , gas , coal , fertilizer  conditions of payment )

 i hold CSR , and several NZ power companies ( affected by the fate  of a NZ smelting complex )

 as the old saying is  rising prices are the best weapon against rising prices  , but that brings in a question of how manufacturers  cope with this ( many need plenty of energy AND aluminum )


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## divs4ever (30 April 2022)

qldfrog said:


> Anyone can enlighten me vs the story of Australia not shipping alumina to Russia?
> Is it just me but are we not the sucker there?
> Russia is 80% self sufficient in alumina and nevertheless is producing for the world market, not for Russia
> So we breach our contracts preventing our sale of alumina, to a country which does not need it anyway as they are supposedly not able to sell russian aluminium?
> ...



well just buying more Russian gas has hit a bit of a snag ( for Europe ) , and Russia has it's own alumina and aluminum  processing capabilities  including  various types of power plants ( including nuclear  ones )

 so are we sending  Australian alumina to Russia  when there is a NZ smelter with an uncertain future  , and energy starved Australia ( sarcasm ) is incapable of processing it's own alumina 

 so yes if the story is correct  .. it is just another Australian sucker story 

 fun fact  , my first win  in the Sunday School fancy dress  competition  i  was dressed up  with banana   leaves and bark  with a sign  'just another sucker ' ( sometimes cheap and cheeky takes the prize )


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## Ann (30 April 2022)

divs4ever said:


> i see rising energy costs as the main worry with aluminum



Not much of a problem...

Alcoa's Portland aluminium smelter subsidy secures jobs, fails green energy test

and then a bit later...

 Alinta proposes 1,000MW offshore wind farm to help power Portland smelter


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## divs4ever (30 April 2022)

Ann said:


> Not much of a problem...
> 
> Alcoa's Portland aluminium smelter subsidy secures jobs, fails green energy test
> 
> ...



 the operative work is 'help' however battery-makers will have a BIG GRIN at the thought of that little exercise ( the guys repairing the turbines  will have an employment future  , as well )


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## qldfrog (30 April 2022)

divs4ever said:


> the operative work is 'help' however battery-makers will have a BIG GRIN at the thought of that little exercise ( the guys repairing the turbines  will have an employment future  , as well )



it's actually scary as there is one thing you can not do with smelters is shutting power..and end up with a jack hamer trying to cut thru a big blob of solidified metal..
Did we not experience that in SA.
It s as critical as hospital power except you can not run it on generator..so intermitten energy source and smelter do not mix


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## bk1 (30 April 2022)

Oh the irony...


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## divs4ever (30 April 2022)

qldfrog said:


> it's actually scary as there is one thing you can not do with smelters is shutting power..and end up with a jack hamer trying to cut thru a big blob of solidified metal..
> Did we not experience that in SA.
> It s as critical as hospital power except you can not run it on generator..so intermitten energy source and smelter do not mix



 haven't  worked with  smelters  but have worked  where a ( steam ) boiler was essential to production ( rubber moulded products )   and the boiler going down   put a real kink in production  for quite a while ( so couldn't begin  to grasp the same problem  with a smelter )


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## divs4ever (30 April 2022)

bk1 said:


> Oh the irony...



 yes  i remember an article ( several years  back ) where a Mexican firm  had the major  steel components of wind turbines  , made in the USA , because transport costs  were heavier than the savings on cheap Mexican labour  ( for turbines to be erected in the USA  , of course )

 interesting times 

maybe voters will stop electing lawyers into political positions


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## Smurf1976 (1 May 2022)

qldfrog said:


> it's actually scary as there is one thing you can not do with smelters is shutting power..and end up with a jack hamer trying to cut thru a big blob of solidified metal..
> Did we not experience that in SA.



In brief:

31 January 2020 a major incident occurred involving structural collapse of 6 transmission towers in Victoria, carrying 2 x 500kV transmission lines. A seventh tower was also severely damaged.

That incident involved the towers physically crashing to the ground in real time, a completely unintended and unexpected occurrence, and disconnected western Victoria (including the Portland aluminium smelter) from the rest of the grid.

A solution making use of physically still intact assets was very hastily devised and actioned with supply restoration to the smelter underway 2 hours and 40 minutes after the incident. In short this involved isolation of the damaged lines and connecting western Victoria including the smelter to SA. 

Another hour or so and it would all have been over since 3.5 - 4 hours is when the cryolite, which melts at just over 1000 degrees C, starts to freeze. Cryolite being a molten material that overlays the aluminium in the smelter pots with the great problem being that once it sets, once it's solid which it is below about 1000 degrees, then it ceases to conduct electricity. Or in simpler terms once it's set there's no way to put heat into the pots to re-melt it = game over.

The improvised solution remained in place, and the smelter operated at full production, whilst towers were installed and lines returned to operation in Victoria.

The same smelter was however far less lucky in 2016 when a major power failure did indeed lead to not all but a lot of the pots solidifying. I don't know what the total cost of the repair was but government chipped in $240 million and that certainly wasn't the full cost.

Any aluminium smelter anywhere in the world uses the same basic process. Take the power out and they're all in the same situation - once the cryolite sets it's very serious time and $ to get going again. To the point that demolition and rebuilding can actually be the cheapest option.


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## Ann (1 May 2022)

Smurf1976 said:


> Any aluminium smelter anywhere in the world uses the same basic process. Take the power out and they're all in the same situation - once the cryolite sets it's very serious time and $ to get going again. To the point that demolition and rebuilding can actually be the cheapest option.



Again, I am just blown away by your knowledge Smurf. That's good enough for me, I am out of AWC as soon as I can sell in the green.


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## sptrawler (1 May 2022)

Ann said:


> Again, I am just blown away by your knowledge Smurf. That's good enough for me, I am out of AWC as soon as I can sell in the green.



Anne I'm not sure AWC actually are involved in the aluminium smelting part of the process, from memory Alcoa is the one who smelts the aluminium, then Alcoa pay a dividend to AWC as they are basically a major shareholder. I think that's how it works.

From memory what AWC is involved in is the mining and processing of bauxite to alumina, this is then further processed to aluminium in the final stage, which I think is what @Smurf1976 was talking about.

Well that is my understanding, I have had AWC a few times, buy in at about $1.50 sell out anywhere above $2.
I don't have any ATM, but I guess I'm saying be sure you're making a decision on the right inputs and assumptions, by the way love your posts.


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## Smurf1976 (2 May 2022)

sptrawler said:


> From memory what AWC is involved in is the mining and processing of bauxite to alumina, this is then further processed to aluminium in the final stage, which I think is what @Smurf1976 was talking about.



Basic process is:

1. Mining

2. Refine the ore to alumina (Al2O3)

3. Smelting to break the oxygen bond and turn alumina into pure aluminium

4. Processing of aluminium to other products - alloys, rolled sheet, powder, etc.

My previous process relates to step 3 only which, in the Australian context, is carried out at 4 plants one each in Qld, NSW, Vic and Tas.

Step 2, alumina, is carried out at various facilities in Qld and WA.

Step 1, mining, in Qld, NT, WA and on a small scale in Tas.

Regarding smelting, step 3, the key practical and economic attribute of it is the need for truly incredible amounts of electricity. If you don't have that then you're stuffed both economically and practically.

For the alumina refining stage, step 2, what's needed is heat so that means fuel. Usually but not always the fuel of choice is natural gas.

From an economic perspective aluminium smelters and alumina refineries thus tend to be located where they can obtain cheap and reliable electricity (smelters) and fuel (alumina refineries). The benefits of that outweigh the cost of shipping things around assuming it's a reasonably accessible location.

From an investment perspective I'm not advocating for or against. I wouldn't avoid the sector due to the risk of energy disruption to a smelter however provided that the company in question isn't hugely exposed to any one facility. For example Rio Tinto's business is very much larger than any of their aluminium smelters, an incident there wouldn't kill the company. Obviously very different if we're talking about some company whose entire business is a single aluminium smelter and there's only one transmission line feeding it (which would be shockingly bad engineering but someone somewhere may well have done it).


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## Smurf1976 (2 May 2022)

Ann said:


> I am just blown away by your knowledge Smurf.



Plenty of things I know nothing about....


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## Ann (2 May 2022)

sptrawler said:


> Well that is my understanding, I have had AWC a few times, buy in at about $1.50 sell out anywhere above $2.



I feel with the need for lighter weight metals for EVs and solar panel framework and a host of other things Aluminium is good for, it should come into its own.  Chart wise it has been in an oscillation pattern for years since it hit the deck in 2008. Surely it is time the thing tried to get back to its levels prior to the GFC. The price of aluminium has been rising for a while now.



Smurf1976 said:


> From an investment perspective I'm not advocating for or against. I wouldn't avoid the sector due to the risk of energy disruption to a smelter however provided that the company in question isn't hugely exposed to any one facility.




OK, I am now thinking it may be reasonable to hang on after what you said. That was all really clearly laid out as always which is a blessed relief for a dyslexic!  I always worry about sudden unforeseen shocks which will not be reflected in a chart. An unforeseen power outage will never make its way through inside knowledge onto a chart. Usually, I can see when the SHF situation is percolating by chart movements.


Smurf1976 said:


> From an economic perspective aluminium smelters and alumina refineries thus tend to be located where they can obtain cheap and reliable electricity (smelters) and fuel (alumina refineries). The benefits of that outweigh the cost of shipping things around assuming it's a reasonably accessible location.



Sounds like they might benefit from a mini self-owned nuclear reactor when the powers that be put a blessing on such things.


Smurf1976 said:


> Plenty of things I know nothing about....




Until it tweaks your interest, I am guessing?


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## divs4ever (2 May 2022)

Smurf1976 said:


> Plenty of things I know nothing about....



 + 1 

 but there are some areas  i know a fair bit about but avoid investing  there ( because they are nests of vipers and scorpions ,  that has saved some capital )


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## rederob (20 May 2022)

While metals across the board declined significantly in price over recent months, their fundamentals are barely changed in terms of tight supply.
Moreover, care is needed to check what data sources are really saying, with this as an example:


In the 20 plus years I have monitored metals, I can't recall live warrants for aluminium below 200K tonnes:


Typically when cancelled warrants exceed live warrants a metal's price will go into backwardation.  I doubt that's far off for aluminium.  Also, without knowing what is presently happening to *Rusal's *aluminium exports in the present climate, the chance of aluminium's price running faster than usual cannot be discounted.


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