RESTRICTED GENERAL AGREEMENT ON MDF/W/61 TARIFFS AND TRADE 11 April 1986 Special Distribution PROBLEMS OF TRADE IN CERTAIN NATURAL RESOURCE PRODUCTS Background Study on Aluminium and Aluminium Products Prepared by the Secretariat Table of Contents Page INTRODUCTION 6 SECTION I: Main features of the aluminium industry 6 Properties of aluminium 6 World bauxite reserves 7 Processing 7 Bauxite processing 7 Alumina refining 9 Aluminium smelting 10 Re-cycling il Industrial applications of aluminium and alumina 12 Substitution 15 Structure of the industry 15 SECTION II: Production, consumption and prices 19 Bauxite production 20 Alumina production 26 Primarv aluminium production 27 Secondary aluminium production 30 World production of semi-manufactures and castings 30 Consumption of primary aluminium 33 Prices and stocks 42 Bauxite 43 Alumina 44 Aluminium 47 Stocks 51 Demand and supply elasticities 51 SECTION III: International trade 53 Trade in bauxite 55 Trade in alumina 58 Trade in aluminium metal 59 Direction of trade 64 86-0470 MDF/W/61 Page 2 SECTION IV: Commercial policy situation Tokyo Round negotiations: tariff assessment 68 Trade in aluminium and aluminium products under different tariff treatment and according to stages of processing 7i Developed countries 7;. Individual developed-country profiles 74 Developing countries 103 Individual developing-country profiles 103 Tariff escalation and effective tariff protection 127 Non-tariff measures 128 SECTION V: Activities in other international organizations 136 The International Bauxite Association (IBA) 136 The Integrated Programme for Commodites in UNCTAD 137 The European Aluminium Association 137 International Primary Aluminium Institute 138 Other Associations 138 SUMMARY AND OBSERVATIONS 138 Annex I¹: Summary of pre-Tokyo and post-Tokyo Round tariff situation affecting aluminium and aluminium products Annex II¹: Trade in aluminium and aluminium products under different tariff treatment and according to stages of processing at tariff line level Annex III¹: The Harmonized System of Commodity description and classification of aluminium and aluminium products ¹Issued as an Addendum to this document. MDF/W/61 Page 3 List of Tables Page 1. World bauxite reserves, 1985 estimates 8 2. World production of aluminium, 1960-1984 (in thousands of metric tons) 21 3. World production of aluminium, 1960-1984 (as a percentage of world production) 22 4. Aluminium scrap recovery, 1960-1984 31 5. Relationship of aluminium recovery and total aluminium consumption for selected countries, 1960-1984 32 6. World production of semi-manufactures and castings, 1970-1984 34 7. World consumption of primary aluminium, 1960-1984 36 8. World consumption of primary aluminium by use, 1984 39 9. Bauxite prices, 1950-1984 45 10. Aluminium prices, 1950-1984 49 11. World stocks of primary aluminium, 1960-1984 52 12. Bauxite/aluminium elasticities 54 13. Trends in income elasticity 54 14. World exports of bauxite and alumina, 1960-1984 56 15. World imports of bauxite and alumina, 1960-1984 57 16. World exports of primary aluminium, 1960-1984 61 17. World imports of primary aluminium, 1960-1984 62-63 18. Direction of trade by main exporters of bauxite, alumina and aluminium, 1984 65 19. Direction of trade by main importers of bauxite, alumina and aluminium, 1984 67 20. Pre-Tokyo Round and post-Tokyo Round tariffs in nine developed-country markets 69 21. Summary of trade in aluminium and aluminium products under different tariff treatments 72 22. Australia 73 23. Austria 77 MDF/W/61 Page 4 Page 24. Canada 79 25. EEC 82 26. Finland 83 27. Hungary 85 28. Iceland 87 29. Japan 89 30. New Zealand 90 31.. Normay 92 32. Portugal 94 33. South Africa 95 34. Spain 97 35. Sweden 98 36. Switzerland 100 37. United States 102 38. Argentina 104 39. Brazil 106 40. Colombia 108 41. Hong Kong 109 42. India 111 43. Indonesia 112 44. Israel 114 45. Korea, Rep.of 115 46. Malaysia 117 47. Morocco 118 48. Philippines 119 49. Singapore 121 50. Thailand 122 51. Turkey 124 MDF/W/61 Page 5 Page 52. Yrgoslavia 125 53. Aluminium and aluminium products m.f.n. tariff treatment according to different stages of processing in the following countries: Cameroon, Chile, Czechoslovakia, Egypt, Ghana, Iran, Jamaica, Nigeria, Peru, Poland, Romania, Tanzania, Tunisia, Uruguay, Zaire 126 54. Non-tariff measures affecting aluminium and aluminium products 129-135 List of Charts Chart I: Primary and secondary aluminium production flows 13 Chart II: Raw materials and processes required to produce one ton of aluminium 14 Chart III: World production of bauxite, 1960 and 1984 24 Chart IV: World production of alumina, 1960 and 1984 24 Chart V: World production of primary aluminium, 1960 and 1984 24 Chart VI: World consumption of primary aluminium by country, 1960 and 1984 35 Chart VII: Consumption of primary aluminium by use, 1984 35 Chart VIII: World production and consumption of aluminium, 1960-1984 41 Chart IX: Bauxite prices, 1950-1984 46 Chart X: Aluminium prices, 1950-1984 50 MDF/W/61 Page 6 INTRODUCTION 1. The present study on aluminium forms a part of the series of background papers being prepared by the secretariat on non-ferrous metals and minerals. These studies are being undertaken in accordance with the Decision taken by Ministers at the Thirty-Eighth Session of the CONTRACTING PARTIES in relation to Problems of Trade in Certain Natural Resource Products. 2. This study provides information on aluminium and aluminium products, covering the following CCCN positions: ex 26.01, ex 26.03, 28.20, ex 28.29, ex 28.30, ex 28.38, ex 28.47, ex 73.02, ex 85.23 and positions included in Chapter 76. Section I gives some background information on the salient features of the aluminium industry. Section II briefly reviews developments with regard to world aluminium production, consumption and prices since 1960. Section III presents information on trade flows in bauxite, alumina and aluminium. Section IV provides detailed information on trade flows on a tariff Une basis, together with tariff treatment in developed-country markets as well as some developing countries. It also provides information on non-tariff measures affecting aluminium and aluminium products. Section V describes the activities in other international organizations related to aluminium. SECTION I: Main Features of the Aluminium Industry Properties of aluminum¹ 3. Aluminium is the third most abundant element in the earth's crust after oxygen and silicon. The metal has been in commercial production for almost 100 years. Aluminium weighs about one-third as much as copper ¹Physical properties of aluminium: Symbol: Al (Aluminium) Density at 200C (68°F): 2.699 Atomic number: 13 Atomic weight: 26.98154 Melting point: 660.2°C Boiling point: 2,477 - 50°C Electrical conductivity: m ohm-¹ cm-¹: 0.382 ²Though aluminium is the most common non-ferrous metal in the earth's crust, it was isolated only in 1825, by Hans Christian Oersted. In 1809, Sir Humphrey Davy proved that clay (aluminium silicate) had a metallic base. Davy suggested the name aluminum for this metal, a name which has been retained in North America but modified to aluminium in most other countries. Hans Christian Oersted was the first to produce the metal (in 1825). In 1827, Friedrich Woehler described the production of aluminium as a powder and in 1845, he was able to make slightly larger amounts of the metal and determine some of its physical properties. Aluminium was introduced to the public in 1855 at the World Exhibition in Paris as a primary metal produced on a laboratory scale. It was not until 1886, after the modern electrolytic method of producing aluminium was discovered almost simultaneously by Charles Martin Hall in the United States and Paul L.T. Heroult in France, that it became a metal of industrial importance. MDF/W/61 Page 7 and steel, is malleable, ductile and easily machined and cast. It has excellent corrosion resistance, high thermal and electrical conductivity and a silvery appearance. It is a versatile metal with many uses, and is only exceeded by iron in terns of the volume of world consumption. Aluminium can be alloyed with many other materials, which, after treatment, have strengths approaching that of mild steel. 4. On account of its high chemical re-activity, aluminium, unlike many other metals, does not occur in the metallic form in nature, but is a common constituent of many minerals, where it is normally present in combination with silicon, oxygen, hydroxyl groups, iron, titanium, calcium and to a lesser extent, with fluorine, phosphorus and boron. The bauxite res, containing the minerals gibbsite, boehmite and/or diaspore, which are currently the main sources of aluminium, account for only a small part of the aluminium present in the world. Other potential sources of aluminium are igneous rocks, sedimentary rocks and metamorphic and metasomatized wocks . World bauxite reserves 5. The principal ore of aluminium is a mixture of hydrous aluminium oxides called bauxite which may occur as a massive hard rock, loose pisclites, or soft clay. Karstic (associated with limestones) and lateritic (usually with aluminosilicate rocks) bauxites are found in most :ountries, with the major resources located in tropical regions. in 2 1985, world bauxite reserves were estimated at about 21 billion tons (Table l), almost 72 per cent of these reserves are in developing countries. About 52 per cent are located in the following four developing countries: Guinea (26.7 per cent), Brazil (10.7 per cent), Jamaica (9.5 per cent), and India (4.8 per cent). Developed countries account for about one-fourth of bauxite reserves. Australia has the world's second target reserves of bauxite, with over 21 per-cent of total world reserves. Processing Bauxite processing 6. About 90 per cent of all bauxite supplies are mined by open-pit methods.