Axios.com – Australia’s growing appetite for aluminium is causing a backlash from aluminium producers, who are demanding a change in policy to limit their use.
Aluminium is Australia’s second-largest export after coal, but it is also becoming increasingly popular among aluminium producers because of its light weight and low cost.
The rise in aluminium demand has prompted Australian producers to introduce a ban on using the metal in their products.
Aluminum is used to make up about 80% of Australia’s cement, steel and aluminium production.
But a recent survey by the Australian Chamber of Industries and Commerce found the number of aluminium manufacturing jobs in Australia is set to increase from 9,500 to 17,000 over the next five years.
Industry insiders are concerned that Australia is entering a period of aluminium “trough-to-trough” in terms of demand.
“We need to look at how much aluminium we’re going to need and we need to think about how we can get to that point and make the most of it,” said Tony Tringali, chief executive of the Australian Automobile Industry Council.
Altois aluminium industry, which employs about 50,000 people in the country, is worried about how aluminium is used in aluminium production in Australia, especially in manufacturing processes such as moulding and forging.
“There are a lot of aluminium makers that are facing very serious structural issues, and that has a big impact on their ability to deliver products on time,” said Tringalyi.
“The problem is that it’s not just the aluminium that’s causing problems.
It’s also the quality of the aluminium.”
Aluminium has been in decline for a decade and some industry insiders have expressed concerns about the long-term impact on the industry.
“Aluminium’s a long-lasting commodity and there’s no way around that,” said Mark McVicar, managing director of the National Aluminum Council, which represents aluminium industry workers.
“It’s going to be very challenging to see the market grow in a sustainable way over the long term.”
Aluminum industry workers say the aluminium shortage is having a big effect on their jobs, but some aluminium producers say the issue is being overblown.
“Our aluminium supply chain is resilient to these sorts of challenges, and it’s the aluminium producers that have been having a difficult time keeping up,” said Andrew Smith, the CEO of aluminium company Altona.
“In the meantime, the market is growing.”
In Australia, aluminium production is estimated to have risen by nearly 10% between 2000 and 2010.
Altona is among the companies that have reported a 25% growth in their aluminium production between 2009 and 2011.
“They’re a lot more robust in the market than we were,” Smith said.
Algonquin, which is the only Australian aluminium producer, is also struggling with the aluminium crisis.
The company’s CEO says he is struggling to keep up with demand for aluminium and is concerned about the future of the industry if the supply chain becomes even more fragmented.
“That’s a concern,” said Algonquin CEO Nick Coghlan.
“This is a problem that affects all of us, and we all have to take responsibility for this.”