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Chalco Qinghai, an Aluminium Smelter owned by Chalco, and Governments, is located at Datong Xian in China. Aluminium Production Cost Reports & DatabasesAlumina and energy are the main contributors to aluminium production costs. Smelters with captive sources of alumina and access to cheaper energy will continue to dominate the lower region of the cost curve. This has prompted producers to place more emphasis on vertical integration and increasing levels of consolidation, as well as modernisations to improve production efficiency in the coming years. The primary drivers for higher long-term forecast metal prices are sustained higher capex costs across the production chain, from bauxite mine development through to refining and smelting, and higher operating costs. Lower energy consumption, longer cell life, lower raw materials consumption and meeting environmental regulations are critical drivers for improving and developing smelting technologies. In recent years, costs have been inflated for all inputs. While the prices of the key external inputs – alumina, electricity, labour and carbon (coke and pitch) – are the principal cost drivers, several internal technological factors are very important because they control labour and energy efficiencies. Operating expenditure is also significantly influenced by alumina quality, anode raw materials, country infrastructure, transport logistics, local equipment/machine suppliers and environmental legislation. Over time, especially in the United States and Europe, older, inefficient smelters will close faster and productive capacity will be replaced by modern, highly efficient plants. Often these will be in localities that have an abundance of cheap energy, as preferential electricity supply contracts expire, especially in the West, and are re-negotiated at much higher rates. This will drive the migration of smelter capacity to countries such as Russia, the Middle East and Iceland. Low-cost gas, geothermal or hydroelectric power will be the driver of this trend. Our Aluminium Smelter Cost Report covers operational data over a 10-year time span, representing more than 94% of world output. The multi-volume analysis estimates production costs in 37 countries, including many of the major facilities around the world. Cost estimates, covering the production process from raw materials consumption to either concentrate or finished metal are provided. Aluminium Smelter Cash Cost Breakdown Alumina Production Cost Reports & DatabasesBauxite and energy are the major contributors to alumina production costs. Refineries with captive mines nearby and access to cheaper energy will continue to dominate the lower region of the cost curve. On average, feedstock represents approximately 27% of industry cash costs. However, this contribution can vary widely for individual refineries, highlighting the advantage of access to low-cost bauxite supplies. The long-term trend is for certain costs (labour and energy) to fall with improving productivity and refinery efficiency, achieved through economies of scale, better management and minor technical advances. This effect has been sporadic in recent times due to the movements of major alumina-producing nations’ currencies against the US dollar. Between 2003 and mid-2008, continued cost pressures drove the cash cost of alumina production strongly upward. Influence from the effects of the global economic crisis led to some input costs easing slightly at the end of 2008. Nevertheless, AME estimates average global production costs were approximately 54% higher in 2008 than estimated for our base year of 2003. Prices of most cost inputs have risen sharply over this time, most notably for feedstock (>50%), energy (>85%), and caustic soda (>150%). Bauxite price trends and negotiations continue to reflect the changed demand environment, and market conditions, particularly in China, remain tight. The precipitous decline in freight rates at the end of 2008 has lowered the cost of delivered bauxite for operations depending on imported feed, such as Shandong in China. This has also improved the competitive position of bauxite exporters. Our Alumina Refinery Cost Report covers operational data over a 10-year time span, representing more than 90% of world output. The multi volume analysis estimates production costs in 22 countries, including many of the major facilities around the world. Cost estimates, covering the production process from raw materials consumption to either concentrate or finished metal are provided. Alumina Refinery Cash Cost Breakdown We benchmark all major operations to highlight changes, assess profitability and identify opportunities. This research provides:
The database ensures access to accurate and timely information for most of the world’s operations. Our analysts conduct thorough examinations of well-sourced data to provide valuable answers, saving you time and effort. Specifically, our work is based on detailed analysis of flow sheets, exhaustive company research, and ongoing revisions supplemented by mine visits and technical contact with individual operations.
Aluminium & Alumina Strategic Market ReportsMarket fundamentals will be determined by the speed and size of the recovery from the global recession. At this stage, 2009 will be a tough year for global consumer demand, and deflationary conditions will remain until 2010. Planned fiscal stimulus plans in China, USA and a host of lesser economies will assist with demand and consumer confidence, and this is likely to effect an improvement on commodity demand in 2010. Longer term the economy will revive, driven by the planned Keynesian government expenditure, continued urbanisation in Asia and progressive industrialisation in the wider developing world. However, global growth will be at more modest levels in comparison to the last ten years. Thus spectacular growth was driven by four principal factors, a combination unlikely to be replicated any time too soon:
Global GDP growth rates will recover after the recession is over, but will be somewhat more modest at around 2% per annum below the rates experienced in the last five years. The outlook this year reflects the economic events of last year. Downturns in construction, automotive and electrical sectors chilled demand and an initially lethargic supply response allowed stocks to increase rapidly. Consequently, prices were depressed to well below the average cost of production for the bulk of the global industry. Global Demand for Aluminium by Region Low demand is expected to persist at least through this year. Supply reduction should accelerate as marginal high-cost producers are increasingly forced out of production. The prospects for aluminium consumption growth will be limited in the short-term. Over time, global fiscal stimulus’, a return of consumer confidence in Western countries, continued infrastructure build and urbanisation in developing countries will see a recovery after 2010. China has continued to increase its share of global aluminium demand to around 35%, and we expect this share to continue to increase out to 2013. Sustained cost pressures and more effective Chinese Central Government measures aimed at curbing over-capacity should lead to a significant easing in China’s supply this year. In the long term, competing demand for electricity will strain general power infrastructure and deliver higher power costs. The increases we have seen in energy costs to date will remain ‘sticky’ in real terms and cannot be regarded as a temporary abnormality. In China, the abolition of preferential power tariffs paints a grim future for outdated and inefficient technology. Penalties on "restricted" and "eliminated" categories above an already high industrial grid power rate will see China look to limit power resources to inefficient plants. For many Chinese smelters, even in buoyant times, the rate of financial return was small, and closure now may be permanent for some of them. With over three decades of experience in market analysis, AME appreciates the old adage "the devil is in the detail" is a fundamental truth. To this end, we concentrate our investigation on end-users, particularly the construction, transport, equipment and consumer durable sectors. We provide, usually quarterly, strategic supply/demand and price analysis to generate our long-term view. We offer:
Aluminium Price Aluminium & Alumina OutlooksOur monthly Outlook offers short-term analysis on developments, operations, consumption, production and trade and export in the Aluminium and Alumina Industries. A tactical, topical and thought-provoking tool; the service includes:
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Critical Mass in People and Resources – Our structured methodology allows us to rapidly undertake assignments and offer consistently rigorous work. This is possible as we employ a considerable team of engineers, geologists, metallurgists, economists, computer programmers and market experts. For nearly 40 years we have built widespread recognition among major mining companies, banks and trading houses, reflected in our increasing market share. Close Industry Connections – Our analysts offer practical intelligence and advice due to years of experience in the mining industry. Consequently, our integrity and credibility is unrivalled when it comes to evaluations of mines, beneficiation projects and end-user plants. A Comprehensive Global View – Our technical associations and international contacts allow us to provide you with broad, in-depth and forward-thinking research. We are a leading independent research firm. For nearly 40 years we have served most major corporations active in the metals, mining and energy sectors. The heart of our organisation is based around the talents of industry-experienced engineers, metallurgists, geologists, scientists, software developers, market experts, accountants and mineral economists with decades of experience, intellectual maturity and consulting expertise. We offer
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