Brazils aluminum industry will be largely untouched by a
government electricity tariff reduction measure announced in
January despite the sectors demand for large quantities
of energy compared with other fields.
In January 2013, the Brazilian
government announced reductions of up to 32 percent in
electricity tariffs for industrial, agricultural and retail
It also announced plans to
double the countrys installed capacity over the next 15
years from the current 121,000 megawatts, as well as
investments in transmission lines.
At the time, Brazils
energy rate for the industry stood at about 329 reais ($164)
per megawatt hour vs. 142 reais per MWh in China, according to
a study released by the Industrial Federation of Rio de Janeiro
But many aluminum smelters
acquire energy through contracts settled in the free market,
which arent directly affected by the new regulations.
"We believe that the aluminum
industry will feel the impact of the electricity tariff
reduction indirectly, mainly through reductions in transmission
costs. Energy costs may fall about 12 percent for the
industry," Brazilian aluminum association president Adjarma
Azevedo told AMM sister publication Metal
This scenario still isnt
enough to make it attractive for companies to increase their
aluminum production capacity. Companies in the country are
instead concentrating on increasing exports of
aluminaBrazil possesses the biggest alumina plant in the
world, owned by Norsk Hydro ASAand bauxite, production of
which is set to increase by 23 percent to 38 million tonnes per
year from 2011 to 2016, Brazilian mining institute Ibram
"One of Mercosurs original
plans was to promote energy integration among its members ...
but that is still a dream," Azevedo added.
A version of this article was
first published by AMM sister publication Metal