Aluminium region expansion

Press, 7 April 1980, Page 10

Aluminium region expansion

By

TOM BRIDGMAN,

■NZPA

> correspondent’ in -Sydney :

Proposals, to increase greatly the aluminium smelting capacity. in New 1 Zealand arp.'.part bf a huge expansion of the Industry; .throughout the region. ; ■:” .> j 7 ”.. Rising • oil prices- have forced -major, changes the aluminium industry and the general rise iff energy costs has the; number, of countries, in which new smelters can be built. Aluminium smelting js energy-intensive and with demand in the;; Western world , outstripping supply the major companies involved have .turned to countries such as; New -Zealand, with its.. power, for their smelting requirements.. .-. ' The;Govemmerit has made it clear . it welcomes industries such as aluminium smelting in the South Island to use up a potential. 5000 GW/h per year electricity surplus and be part of its development strategy based oh export-led growth. The announcement by Comalco this week that it has definite proposals to expand the smelter at Bluff — in which it has a 50 per

cent shareholding in conjunction with two Japanese companies -—. and. possibly build a second is part , of that policy. - . In its latest annual report out this week, Comalco said that “changed marketing opportunities. in Australia and overseas mean that a much greater portion of the company’s revenue will . arise from primary and semi-fab-ricated alumunium. Future investment patterns will reflect this change.” Other companies have also shown interest in a New Zealand smelter. The Government has £t firm proposal from a consortium of Alusuisse in conjunction with Fletchers and the Australian CSR company for a $6OO million smelter at Aramoana, near Dunedin. The giant American company, Reynolds International, has a proposal lodged for a smelter and fabricating plant, and the Maryland-based Martin Marietta Corporation has reportedly also shown interest. The plans are being studied by a Government committee which will have to determine which will use the surplus power, but the cost of the electricity will be an

important factor to the companies.. . . Comalco in particular will ' not want to repeat, its battle with the Prime .Minister (Mr Muldoon) three years ago which-led to its: having to put up with & 560 : per cent increase in the ccfet of electricity over two years after : tiie rewriting of the Manapouri power agreement _ In Australia there is a i positive boom underway in aluminium smelting with five new smelters, three in i New South Wales alone, - either under construction or soon to be which will add L 892,000 tonnes production a year by the mid-1980s. Two others are being ex- . panded, adding a further 110,000 tonnes, and if Comalco brings in a third and , fourth potline as expected at its huge complex at Gladstone in Queensland by 1989 and Alcoa proceeds with a : proposal for Western Aus- . tralia, a further 440,000 tonnes a year be added. In all, the developments would increase production from 280,000 tonnes to 1.7 million tonnes a year, just over 10 per- cent of the Western world’s present output Comalco figures show that

demand for the aluminium is there. Last year the comt pany estimated a Western world demand for aluminium of 13.8 million tonnes in 1981, rising to 16.4 million tonnes by 1985. But supply in those periods would remain static leaving a shortfall on 1.4 million tonnes in 1981 and 4 million tonnes in 1985. The latest Comalco report said higher oil prices had had a shattering effect on smelting in countries such as Japan. The Japanese had relied heavily on oil-fired stations to provide electricity for smelters but these were no longer economic and now 30 per cent of Japanese smelting capacity was idle. Demand for bauxite, the raw material for aluminium, had fallen and to a large extent was being replaced by a greater demand for imported aluminium, it said. Comalco said that during the last two decades almost 60. per cent of the Western world’s demand for aluminium had been accounted for by North America. “By ; the’ middle, of the 1980 s, however, the North American > market may account for. less than 40 per

cent, as a result of growth in consumption by other countries. This will be paralleled by an increase in the proportion of smelter capacity located outside the North American area, including new capacity in Australia.” The * upsurge in aluminium smelting in Australia and New Zealand has not met with universal acclaim. New Zealand environmentalists have opposed the use of the electricity surplus for smelters, saying it could be better used for industries based on the country’s own resources or for cheaper domestic power. In Portland, Victoria, where Alcoa is building a 132,000 tonne smelter, residents have formed an action group to express concern about the social . and environmental problems it will bring. Similarly, in the Hunter Valley region of New South Wales, where two of the state’s new smelters will be built, locals .are up in arms. The area is noted for its tourism and winemaking and of particular concern to winemakers is the threat of increasing fluoride levels in the grape because of the smelters.