N.Z. aluminium “not expensive”

Press, 9 April 1981, Page 23

N.Z. aluminium “not expensive”

PA Invercargill The decision of Alcan New Zealand, Ltd, to look overseas for aluminium ingot on better terms than those available from the Tiwai Point aluminium smelter does not rtiean that local production is becoming too expensive. The New Zealand price was rising only through currency exchange adjustments as the floating New Zealand dollar weakened against other currencies, most notably the U.S. dollar, said the •N.Z. marketing manager for Comalco, Ltd, Mr M. B. Bennett, yesterday. Comalco is the'major participant in New Zealand Aluminium Smelters’ Tiwai Point plant.

Mr Bennett was commenting on remarks made by the chairman of Alcan, Mr J. B. Clarkson, in the annual report, that the Government had approved his company seeking ingot supplies from overseas, and that a shortage of ingot from Tiwai Point had restricted Alcan's production. Mr Bennett said that last August agreement was reached with the Govern-

ment, after numerous discussions with the Department of Trade and Industry, and users, to lift price controls and refer the price of aluminium to the Alcan world price. That price is fixed in U.S. dollars, and is a maximum producers price. At the same time import controls for aluminium were removed, which meant that customers did not have to buy from Comalco if they did not wish to, he said. It also meant Comalco was entitled to adjust the price at intervals of not less than three months to the extent of the currency variations between the N.Z and U.S. dollars.

The Alcan international c.i.f. price for 99.5 per cent purity ingot was increased from SUSI6OO to SUSI7SO a tonne on March 27 last year. On September 4 last year, price control was removed in New Zealand, and the New Zealand equivalent price was 51777 free in store (f.i.s). On December 4 the price could have been increased further but Comalco decided to w’ait until May 1 when the price would be whatever the rate of exchange on that day.

“It is not strictly accurate to say we are increasing the price. We are merely adjusting it back to the equivalent of the $U51750." Mr Bennett said. It was a currency exchange adjustment and did not mean that the cost of making aluminium at Tiwai Point was the most expensive in the world. The JUSI7SO was known as a producer price, but there was also a “spot" metal market where prices fluctuated considerably, he said. It was recognised at the time of the negotiations to remove price controls — they had existed since the smelter was started up nearly 10 years ago — that the “spot" metal market would be above the Alcan price, as it was then, and sometimes below, as it is now. However, lower-priced metal on the “spot" market was usually situated a long way from’ the buyers and transport costs were high. The market was also cyclical, and highs or lows did not usually last long. However, Comalco fully recognised Alcan's right to import aluminium, he said. Referring to Mr Clarkson’s mention of a shortage of ingots from Tiwai Point, Mr Bennett said he must have been referring to a restriction that was put on the amount of metal that could be held on in what was known as consignment stock. It was a commercial matter and had been extensively discussed with the Department of Trade and Industry, Mr Bennett said. From the end of June all business would be on a direct sales basis.

In the recently released annual report of Comalco, the managing director, Mr Mark Rayner, said that volume of domestic sales of aluminium improved further last year with sales in New Zealand, including those of group companies, increasing 6 per cent compared with the previous year.