1a2 - Prosser - Challenges Facing Australasian Al Industry

12th Australasian Aluminium Smelting Technology Conference
Queenstown, New Zealand 2018
CHALLENGES FACING THE AUSTRALASIAN

ALUMINIUM INDUSTRY
Miles Prosser1,a
1
Australian Aluminium Council, PO Box 63, Dickson ACT 2602, Australia
a
miles.prosser@aluminium.org.au
Abstract
Global supply chains in the upstream aluminium industry are in a state of flux, prompting a
range of new challenges for the Australasian industry.
Aluminium smelting capacity has grown aggressively in China, driven by objectives related to
regional development. Growth continues in recent years, albeit at slower rates - offset by some
closure of old or ‘illegal’ capacity amid air pollution concerns.
China’s growth has also triggered fundamental changes to global supply chains with a gradual
erosion of the traditional corporate model of vertical integration and a rise in the number of
independent operations – particularly in the bauxite mining sector, but also in alumina refining
and aluminium smelting.
The policies supporting China’s growth in capacity have come under scrutiny in other
countries, triggering responses as varied as anti-dumping actions, WTO cases, imposition of
tariffs, and calls for a global forum to address ‘over-capacity’. For the Australasian industry,
China is simultaneously a customer, a collaborator and a competitor in the industry – requiring
a nuanced and considered relationship.
Increasing levels of global competition, and engagement with some key customers, have led to
a rise in third-party certification schemes. The Aluminium Stewardship Initiative (ASI) is the
principal industry-specific scheme but other means of certification and labelling are also being
pursued by large corporates.
Electricity supply (reliability and cost) is critical for the competitiveness of aluminium
smelters. There will be a global trend toward low- or zero-emissions electricity sources.
Australia and New Zealand represent different points along this transition process.
For Australian smelters, the major challenges in electricity supply are:

 Ensuring adequate levels of reliable electricity supply;
 Procuring long-term electricity contracts at internationally competitive prices; and
 Managing the speed of transition to a lower emissions electricity grid.
For New Zealand, the major challenges in electricity supply are:

 Procuring long-term electricity contracts at internationally competitive prices; and
 Managing reliability of supply in the face of seasonal variations in electricity supply
capacity.
1
The ability to address these challenges of electricity supply, and finding appropriate roles
within evolving global supply chains will determine the success of the industry in Australasia
in the near future.
2
Australian Aluminium Council Ltd.
CHALLENGES FACING THE

AUSTRALASIAN ALUMINIUM
INDUSTRY
Miles Prosser
Australian Aluminium Council
Presented by: Miles Prosser

www.aluminium.org.au
Outline
• Global market
• Supply chains
• Trade
• Sustainability
• Electricity
3
Positive Demand Forecasts
Recycled
Primary
Drivers of Growth
4
Aluminium Price
Aluminium Production 1990-2017

5
Aluminium Consumption 2017-2030
China
Changing Global Supply Chains

• Alcoa and Arconic
• Rio Tinto – Weipa and Quebec
• China
• Middle East
• Guinea bauxite
• Indonesia and Vietnam
• Alumina and aluminium prices
6
Australasia in Global Supply Chains
Trade Skirmishes
7
Global Trade
• Government support in China
• US Tariffs
• US Treasury Russian Sanctions
• Anti-dumping actions
• Trade is essential
• China relationship
China Relationship
US:
• Overall deficit
• China deficit,
low exports
NZ & Australia:
• China is a key export market
• Overall balance, China balance
8
Aluminium Stewardship Initiative
• Independent certification
• Supply chain
• Market demand
Low Carbon Marketing

9
Sustainable Bauxite Mining
Guidelines
http://aluminium.org.au/news/sustainable-bauxite-mining-guidelines/
http://www.world-aluminium.org/publications/tagged/bauxite%20mining/
http://www.world-aluminium.org/media/filer_public/2018/05/18/170518_sbmg_final.pdf
Electricity
• Internationally competitive price
• Reliable and continuous
• Can be contracted
• Low emissions?
10
Electricity challenges
• Solving the trilemma
• Competing uses
• Seasonal reliability
Conclusions
• China Growth
• Deconstructing supply chains
• Trade
• Sustainability Marketing
• Influence what you can, adapt to what you can’t…
11
Thank you
12

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12th Australasian Aluminium Smelting Technology Conference

Queenstown, New Zealand 2018

CHALLENGES FACING THE AUSTRALASIAN

For Australian smelters, the major challenges in electricity supply are:

For New Zealand, the major challenges in electricity supply are:

CHALLENGES FACING THE

Presented by: Miles Prosser

Aluminium Production 1990-2017

Changing Global Supply Chains

Low Carbon Marketing

• Influence what you can, adapt to what you can’t…

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