Posted on 01/29/2008 8:21:57 AM PST by reaganaut1
If you're nervous about America's place in the world, you should be nervous about companies like Alcoa Inc. A new group of global titans created by rising commodity prices, geographic quirk, and meddlesome home governments has made this American stalwart into a pipsqueak.
...
Alcoa's strategic dilemma begins in the desert lands of Saudi Arabia, Oman and Dubai. A slate of new aluminum-smelting projects are under way there, developed by, among others, government-backed Chinese producers and Alcan, which was just purchased by London's Rio Tinto Group.
Making aluminum requires vast quantities of electricity, which can account for a third of aluminum's overall costs. The new smelters upend those costs by taking advantage of natural-gas fields underneath the desert. By 2015, the Middle East smelters could produce aluminum 25% cheaper than Alcoa does now, says John Tumazos, who runs a metals-research concern called Very Independent Research. "It will be very difficult for Alcoa to compete," he says.
As if that weren't enough, the world's largest aluminum producer, the newly formed United Co. Rusal of Russia, is considering a nuclear-powered smelter in Siberia as part of an $11 billion capital-spending plan.
(Excerpt) Read more at online.wsj.com ...
You could make electricity free to Alcoa, and it still wouldn’t build a new smelter here due to environmental concerns. (I exaggerate, but you get the point).
Open our oil and coal fields, build refineries, bring nuclear back, eliminate the income tax, make trade fair, cut subsidies, deport illegals, shrink government and let's get back to work.
And let me guess - these countries are exempt from Kyoto if it were passed.
Not to nitpick, but isn’t the process of extracting aluminum from bauxite called reduction, not smelting? Cheap hydro-power from Quebec is why the ore freighters from Jamaica deliver bauxite up the St. Lawrence to Messina/Ogdensburg.
My brother in law works in IT at the Alcoa plant in Port Lavaca, Texas. (Halfway between Houston & Corpus puts it exactly in the middle of nowhere). The plant takes in the raw unprocessed dirt from African mines and converts it to bauxite, where it’s then shipped to American smelters.
Last year they almost had a strike by the plant workers (my bro-in-law was exempt). Now he’s nervous about the long term prospects of the plant, although if the plant closed he’s old enough and has enough time in that he’d probably get a decent early retirement package. He should be nervous; his plant can easily be replaced by just moving the operation down the coast a couple hundred miles across the Rio Grande. His plant’s operation is not so dependent on massive amounts of electricity; the next step in the process is.
But, the point about the environmentalists shutting down our industry is well taken. The Russkies have the right idea; build a nuke for electricity for the aluminum smelter and put the excess on the grid. In fact, there is no reason we should not have the cheapest electricity in the world, and none of it should be run on oil or gas. Plenty of coal, plenty of uranium & plutonium.
Alcoa’s set the seeds of its own fall, regardless of these outside actions.
They hired a new CEO that has moved the headquarters to NYC from Pittsburgh where it has been since its founding. This new CEO was more concerned with being able to get a non stop flight to Europe and back than remainging close to their operations.
They have made repeatedly bad moves for quite a while, hoping acquisition will protect their share..etc etc... The fundamentals of the business have been overlooked for a long long time.
While international competition will affect the industry, mismanagement by ALCOA itself is why its losing its influence.
Just keep those frickin' aluminum bats in the bag.
It’s happening in oil and coal, too.
The nitwit leftists keep whining about the obscene profits of the big oil producers, but I have news for them. Exxon Mobil is the biggest of our oil companies, but it’s now a pipsqueak compared to some of the foreign concerns, including Russia and China.
If those jerks think it’s unpleasant having Exxon make a big profit, just wait until all the profits are made by Russia, China, Canada, and Brazil.
And clinton kindly locked up most of our clean coal, so his good pal and campaign contributor Mochtar Riady can make more money for the Muslims in Indonesia.
The fears of an eventual takeover of that license and the plant, selling electricity to the grid using a public resource without sufficient return to the region's public are not unjustified, it seems to me, after reading this assessment.
I express no opinion as to whether they should be relicensed on the Yadkin, but it turns out the environmental clean-up is the hard-to-identify difference between the arsenic naturally part of the geologic "background" and that same toxic by-product of smelting.
Thanks for the post.
“Not to nitpick, but isn’t the process of extracting aluminum from bauxite called reduction, not smelting?”
Actually, it’s a high-temperature electrolysis process. That’s why it takes so much electric power.
http://en.wikipedia.org/wiki/Hall-H%C3%A9roult_process
I meant to write that there is no GOOD reason we should not have the cheapest electricity in the world.
Here is the way it will work. These countries will sign Kyoto if they determine they can make money on 'carbon credits'. And beyond that they will ignore the rest of the agreement and laugh at us.
We will agree to the terms and ruin our economy, but we will be so 'green'!
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