I Bauxite and Aluminum Handbook Commodities and Export Projections Division Economic Analysis and ProjectUonsDepartment 3 . February 1981 TABLE OF CONTENTS Page No. I. CHARACTERISTICSOF BAUXITE/ALUMINA/ALUIMINUM.............. 1 A. Introduction .......... 1 B. Definition of Products .......t ........ ......... * 1 C. Uses ....... ..... 2 D. Technology . ... ... 5 II. THE LOCATION OF THE INDUSTRY....................... #...... I A. Production...... ... .. ......................... .. 1 B. Consumption....... ... .. to. 6 C. Trade.................................. 8 III. THE STRUCTURE OF THE INDUSTRY........................ 1 A. Organization ................... .- .. ....... ... 1 B. Marketing .............# ............................ 4 O ZIV.ECONOMIC PARAMETERS FOR MARKET ANALYSIS OF THE BAUXITE-ALUMINUMINDUSTRY ......................................... 1 A. Demand and Supply Elasticities........ ........... 1 B. Price DeterminationMechanisms ....................... 2 V. MARKET PRICES FOR BAUXITE, ALUMINA AND ALUMINUM.......... 1 A. Bauxite................................ .... .*............... 1 B. Alumina .............................................. 7 C. Aluminum,, ........**.............. #.... **.*..................... 7 VI. SPECIAL ISSUES........................................... 1 A. Shipping................... .... .0.0.......................1 B. The InternationalBauxite Association (IBA) .......... 3 C. The Integrated Program for Commodities............... 4 D. United States Government Stockpile................... 5 February1981 List of Tablesand Figures Tables Page No. I-1 Classificationof Bauxite/Alumina/Aluminum Products. ..... ................................. I - 3 1-2 Consumptionof Aluminumby End Uses, 1978............... I - 4 I-3 Main Inputsto ProduceOne MetricTon of Bauxite........ I - 7 I-4 Inputsto ProduceOne MetricTon mt of Alumina.......... I - 9 1-5 EstimatedInputs to ProduceOne MetricTon of Primary Aluminum Metal ...................... .......... I - 11 II-1 World Bauxite Reserves .. ........o .a ....... .. II - 2 11-2 Bauxite- World Productionby Main Countries and Economic Regions .. ....... II - 3 II-3 Alumina- World Productionby Main Countries and EconomicRegions... ................................ II - 4 @ II-4 PrimaryAluminum - World Productionby Main Countriesand EconomicRegions ........ o.................. II - 5 II-5 Primary Aluminum - World Consumption by Main Countries and Economic Regions.. ........................ II - 7 II-6 Bauxite - World Exports by Main Countries and Economic Regions ........ o ........... o.........o ...... II - 9 II-7 Bauxite - World Imports by Main Countries and Economic Regions .................................... II - 10 I}-8 Primary Aluminum - World Exports by Main Countries and Econom ic egions .......................... II - 11 II-9 Primary Aluminum - World Imports by Main Countries and Economic Regions................. ........ 11 - 12 111-1 Company Concentration in Bauxite Mining, 1977.......o.... III - 2 III-2 Company Concentration in Alumina Refining, 1977 ......... III - 2 III-3 Company Concentration in Primary Aluminum Smelting, 1977 ......o ....... .. III - 3 @ III-4 Post-Kennedy Round Tariffs on Bauxite, Alumina Aluminum.**........... ......9................... ..III .- 6 February l9Rl List of Tables and Figures (Cont'd) Tables Page No. IV-1 Elasticitiesfor Bauxite/Aluminum...................... IV - 3 V-1 Bauxite Prices, World Bank Estimates, 1960-1980........ V - 4 V-2 Prices of Jamaica Bauxite Imported Into the United States 1972-1977, U.S. Dollars Per Metric Ton......... v - 5 V-3 Approximate Bauxite Prices, Taxes, and Impact on Alumina Costs, Western Countries, 1977.... -........v - 6 V-4 Average Prices of Alumina at the U.S. for Shipments From Different Countries..................... -8 V-5 Main Pricing Systems for Aluminum............. ......... V - 9 V-6 Primary Aluminum Prices 1950-1980...................... V -.11 VI-1 Principal Ports Loading Bauxite and Alumina............ VI - 2 VI-2 U.S. Government Desired Inventory Mix for Stockpile Groups ......... ... VI - 7 Pigure I-1 Plants and Products of the Aluminum Industry........... I - 6 February 1981 Conversion Factors Product Inputs to Produce 1 ton of Product Alumina 2 - 2.5 tons of Bauxite Aluminum 1.9 - 1.95 tons of Alumina Aluminur 3.8 - 4.9 tons of Bauxite Calcined Abrasive Bauxite 1.75 tons of Bauxite Calcined Refractory Bauxite 1 8 tons of Bauxite February1981 I-1 I. CHARACTERISTICSOF BAUXITE/ALUMINA/ALUMINUM A. Introduction 1. Bauxite, which consistsof oxide type ores containinghydrated alumina is mainly used for the production of aluminum. In addition, minor amounts of bauxite and alumina are consumed in the refractory, abrasive and chemical industries. 1/ Aluminum is obtained from two basic sources: (i) bauxiteores which dre refinedinto aluminaand then processedinto aluminum and (ii) aluminumfrom scrap.2/ B. Definitionof Products 2. The principaltypes of bauxiteare the trihydrate,gibbsite 'A103.3H20) and the monohydrates,boehmite and diaspore(A1 203.H20). Mono- nydratesare commonlyfound in Europeand NorthernAsia. In other parts of the world,bauxite is foundas gibbsite,but in some cases containingas much * as 20 percentboebmite. Trihydratebauxite is preferreddue to its higher solubilityin causticsolutions and the lowerpressures and temperatures requiredfor the refiningof alumina.3/ The most objectionableimpurities associatedwith bauxiteare silicatesand iron oxide. Bauxitewith a low iron contentmay be used in the chemicalindustry. Calcinedbauxite, prepared by heatingbauxite at high temperatureis used by the refractoriesindustry and to make intermediateabrasive products. 3. Alumina,is aluminumoxide (A1203 ) used for the productionof aluminumand in lesseramounts to producecalcined alumina for the manufacture of fused aluminaabrasives and high temperaturerefractories and activated aluminafor chemicalprocesses. 1/ In the U.S., about 12 percentof the aluminumconsumed in 1975 was used as bauxiteor aluminain nonmetalapplications. See Stamperand Kurtz. * 2/ In the U.S.S.R.,alumina is also extractedfrom nephelineand alunite. .3/ Stamper and Kurtz. February1981 I-2 4. Aluminumscrap is classifiedinto new and old scrap. New Scrap is gereratedin the manufactureof primaryaluminum and of aluminumproducts. It may be recycledby the same companythat generatesit or purchasedby other companies. Old scrap comes from discarded,used and worn out products such as aluminumengines or body parts,used aluminumcans and utensilsand old wire and cable.1/ 5. Aluminummetal has relativelylow densitv,high electricaland thermalconductivity, good resistanceto corrosionand may be alloyedand treatedto yield a high strergth-to-weightratio. 2/ Aluminumis available commerciallyas ingotswith a minimumcontent of 99.5 percentaluminum. Higherprices are paid for purer grades. 6. Ingots,molten aluminum and aluminumscrap with alloyingmaterials are transformedinto mill products,such as bars, rods and wire; plates, sheetsand strip;tubes rnd pipes;and other products. C. Uses 7. Most of the bauxiteis used for the productionof alumina. The remainderis used as bauxiteby the abrasive,refractory and chemicalindus- tries;to producealuminum sulfate and other chemicalsfor water treatment and for the paper industry;and for cements,catalysts and fluxes. 8. Alumina is mainly used to produce aluminum. Other uses are as calcined alumina in the abrasive, refractory and glass industries; as alumina hydratesto producealuminum chemicals and fire retardants; in tubular form for ceramicsand refractories,and as activatedalumina used to dehydrate liquidsand gases in the chemicaland petroleumindustries. 9. Consumptionof aluminummetal by end uses is shown in Table I.2. The transportationindustry accounts for about one fourthof metal consumption, 1/ Ibid. 2/ Stamperand Kurtz. February 1981 1-3 Table 1.1: CLASSIPICATIONOF BAUXITE/ALUMINA/ALUMINUMPRODUCTS Product SITC /a Dried Bauxite 287.31 Alumina 287.32 Aluminum Ingots 684.1 Aluminum Products: 684.2 Bars, rods, angles, shapes, sections and wire 684.21 Plates, sheets and Strip 684.22 Foil 684.23 Powders and flakes 684.24 Tubes, pipes and blanks thereof, hollow bars 684.25 Tube and pipe fittings 684.26 /a SITC Revision 2. Source: United Nations, "Standard InternationalTrade Classification, Revisiou 2, New York, 1975. Table I.2: CONSUMPTION OF ALUMINUM BY END USES, 1978 W. Europe /1 Japan U.S. World Average Transport 29.5 23.1 23.6 24.9 Mechanical Engineering 6.8 4.5 6.1 5.9 Electrical Engineering 9.7 10.5 10.2 10.1 Building and Construction 16.7 34.4 23.8 24.2 Packaging 10.4 6.8 22.0 16.2 Domestic and Office Appliances 9.3 6.2 7.2 7.5 Metal Industries and Miscellaneous 17.6 14.5 7.1 11.2 100.0 100.0 100.0 100.0 /1 Germany, France, United Kingdom, Italy Source: Computed from Metal Statistics,Metallgesellschaft, 66th Edition, 1979. * * *~~~~~~~~~. February1981 I-5 where aluminumis used in motors,vehicle parts, electrical uses and paints. The main attractionof aluminumin this sectoris its high strengthto weight ratio. Near to 6 percent of aluminum metal is for machinery and equipment (mechanicalengineering). The electrical engineeringand communications sectoruses one tenth of the aluminummetal produced. Alam1num'shigh elec- tricalconductivity and lower densitythan copperare responsiblefor the displacementof the lattermetal in many applicationsin this sector. About one fourthof aluminumconsumed is used in buildingand construction,for doors and windows,heating and air conditioning,structures and other uses.