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Aluminum sector ready to grow: execs

Keywords: Tags  Alcoa, Randall Scheps, Davenport, Rio Tinto Alcan, Jean Simon, Noranda, Layle

ISLE OF PALMS, S.C. — The aluminum industry is prepared to meet increasing demand from the automotive industry and other potential growth markets, industry executives say, either by adding new rolling capacity or expanding or retooling existing facilities.

There currently is enough capacity to meet aluminum demand from the automotive sector, Randall Scheps, director of automotive marketing at Pittsburgh-based aluminum producer Alcoa Inc., said during a roundtable discussion at the Aluminum Association’s spring meeting in Isle of Palms.

The trick will be engaging customers early enough in the development process to determine whether and when new capacity might be necessary, he said. "We can’t have them calling 12 months before they need 100 million pounds of metal. But certainly, if they call us three years ahead of time we can make it happen either by adding new rolling capacity or converting existing capacity from one market to another."

Alcoa is in the process of investing $300 million in its rolling mill in Davenport, Iowa, to serve the auto industry, Scheps noted. "We believe that some of our competitors are doing the same levels of investment. Certainly, to serve the auto market there has been major, major investment—and we believe there will be more in the future."

Schep’s remarks came after Alcoa chairman and chief executive officer Klaus Kleinfeld said the company’s Davenport facility won’t be enough to meet future demand from the auto sector (, April 9).

"When you are making a car, there are like 3 million pieces that come together. You don’t do that in a day," an Alcoa spokesman said. "That lead time is very long, so the sooner (automotive firms) get their partners involved, the better off they are. And that’s what’s happening today—a fundamental change that’s happening."

Both Scheps and the spokesman declined to comment on whether any particular automotive company or supplier might be looking to boost aluminum requirements for a new product or vehicle model.

North American primary aluminum production also can be expanded, said Jean Simon, president of primary metals at Montreal-based Rio Tinto Alcan Inc., which is already spending $3.3 billion to modernize its smelting operations in Kitimat, British Columbia, a process that should be completed in 2014.

"We are in a good position to follow the market, and there are other projects that we have in hand," Simon said, although he noted that the company has been cautious to add additional tonnage in the wake of the recession, despite positive forecasts.

Other possible expansions include Rio Tinto Alcan’s AP60 Technology Center, which is expected to begin operation in mid-2013, as well as its Alma smelter in Quebec, which has a nameplate capacity of 438,000 tonnes per year (, Aug. 29). "Nothing has been announced. It is just looking into the future," Simon said.

"We will balance our potential move with the demand for aluminum in the coming years," he said. "But the point is, there is potential in North America to continue to provide primary aluminum."

Noranda Aluminum Holding Corp. also is expanding. The Franklin, Tenn.-based company has announced a $45-million investment in a new rod mill, a $38-million project to boost productivity and capacity at its smelter in New Madrid, Mo., and also plans to invest $20 million in a port expansion in Jamaica, said president and chief executive officer Layle "Kip" Smith. Combined, the projects represent "another positive story about investment, growth in capacity and jobs."

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