Aluminum supplies cannot keep pace with demand, because producers are not able get the sufficient electricity to produce the lightweight metal, according to a July 1, 2008, Timesonline article. The Internet news service says a crunch on global power is likely to send aluminum prices – already at historic highs – skyrocketing an additional 33 percent in the next two years.The article reports that a large aluminum smelter consumes as much electricity as a city, and that a single furnace uses enough power for 1,000 homes but produces only about three tons of metal per day. Electric power is about 20 percent to 40 percent of the cost of producing aluminum, depending on the smelter’s location. One of the world’s largest aluminum producers is China, yet, high energy costs in that country may lead to smelter closures, the July Timesonline contends. The article claims that China houses some of the world’s least efficient aluminum producers. It explains that most of these smelters utilize electricity from coal-fired power stations, and the price of their energy has also risen dramatically. In February alone, the article says, the Chinese government had diverted electricity to the nation’s cities to prevent blackouts, resulting in an estimated 600,000 tons of aluminum production to be lost. Similar power crunches have hit aluminum production in South Africa, Brazil and New Zealand, the article reports. Other industry analysts predict that aluminum prices will hit $4,000 a ton in the next couple of years. During early July 2008, the metal was trading at $3,380 a ton on the London Metal Exchange. “Access to secure and cheap power is now more important than ever for aluminum producers,” says Tom Albanese, the chief executive of major aluminum producer Rio Tinto.
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