Re: [GreenYes] Spewing out yet more aluminum...

["Doug Koplow" <koplow@indecon.com>]

Kind of funny that the July 2002 issue of Recycling Today has a supplement on nonferrous scrap with an article by Brian Sturgell, executive VP of Alcan and chairman of The Aluminum Association.  This piece contains the following text:

"...the bottom line from the aluminum industry's perspective was that Western world demand for aluminum in 2001 fell by six percent overall, and by a whopping 12 percent in the U.S.  That represents the biggest decline in more than 20 years for our industry.  Furthermove, with this picuture, our industry ended the year with world supply exceeding demand by some 400,000 metric tons, despite significant energy-related cutbacks of primary production."  (Recycling Today Nonferrous Scrap Supplement, July 2002, p. S5).

So why would Alcoa agree to build a new smelter in this supply-glut environment?  The only possible reason is that it will be a very low-cost production facility, able to be competitive despite the glut in aluminum production capacity.  Since Iceland isn't known for its extensive or inexpensive deposits of bauxite, this competitive advantage can only come from two places:  cheap financing and/or cheap electric power.  And both of these subsidized inputs can only be coming from the government of Iceland.  What we appear to have is a situation where the power demand from the aluminum plant is used to justify the hydro dams themselves.  Yet it is almost certain that massive public subsidies from the government of Iceland are needed to make either of these pieces go.  

Opponents of this project should force transparency on all giveaways to Alcoa, as well as on the underlying assumptions regarding the massive benefits this smelter will supposedly bring to the Icelandic masses.  I would be stunned if, in the end, the project still looks like a good deal.

-Doug Koplow

_______________________________
Doug Koplow
Earth Track, Inc.
2067 Massachusetts Avenue - 4th Floor
Cambridge, MA  02140
Tel:  617/661-4700
Fax: 617/354-0463



>>> <JenGitlitz@aol.com> 08/09/02 01:47PM >>>
Hello BBANers and GreenYesers:
Below are two stories about how Alcoa just signed a deal with the government 
of Iceland to build a 295,000 ton aluminum smelter which would be supplied by 
numerous new dams and a 500-megawatt hydroelectric power plant.  While Alcoa 
charges that the project is benign, local and international environmentalists 
disagree.  They warn that  sensitive habitat will be irreparably harmed by 
the project, threatening pink-footed geese and reindeer, and inundating 
spectacular canyons. The low cost of electric power in the deal makes this 
Icelandic site more attractive for smelting than higher cost areas--such as 
the U.S. Pacific Northwest.  

Is it worth it to destroy Europe's second largest wilderness area for 295,000 
tons of aluminum a year?  As the recent CRI report "Trashed Cans" pointed 
out, Americans wasted 790,000 tons of aluminum cans last year--MORE THAN TWO 
AND A HALF TIMES the anticipated Icelandic production capacity.  (This report 
can be ordered at www.container-recycling.org/publications/order.htm).

Wasting notwithstanding...does the world really need the aluminum from this 
new development project and others like it? Not according to industry analyst 
Deutsche Bank.  According to a recent report, "This growth in capacity is the 
primary reason why we think the primary aluminium market will remain in 
surplus over the period 2002-2004 and price appreciation will be limited."  

Oversupply in the primary market is directly linked to depressed prices for 
UBCs...a disappointment to curbside operators who look to aluminum can 
revenues as their salvation.

For more information on these issues, please contact me (Jenny Gitlitz). **************

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