BRAZILIAN ALUMINUM - solutions for sustainable living

BRAZILIAN ALUMINUM SOLUTIONS FOR SUSTAINABLE LIVING 13 CHALLENGES AND OPPORTUNITIES FOR THE ALUMINUM INDUSTRY IN BRAZIL Bauxite Notwithstanding the fact that plenty of bauxite is available in geological terms, the challenge for the industry has been the economic and commercial access to it. Increasingly, concerned critical success factors tend to focus on infrastructure, logistics, efficiency and social and environmental responsibility of the mining operation. Considering a global aluminum demand of about 84 million tons of primary aluminum in 2025, the supply of bauxite would need to achieve around 420 million tons, a paramount fact for the ore exporting countries. In China, the huge rise in primary aluminum production, associated to the decrease in its bauxite reserves, has led the country to seek other suppliers, encouraging some countries which quickly began to develop their mining, so as to export and supply the Chinese industry. That is the case of Indonesia, which once accounted for 70% of bauxite imports by China, producing around 12 million tons per year (i.e. 12% of the world volume), until the Government enacted a shutdown in operations in 2014 owing to environmental problems. Thus, Malaysia has turned into a leading supplier to China. Part of the bauxite mining in the country is carried out by small companies, which are not required to conduct environmental impact studies for activities performed in areas smaller than 100 hectares. Such move has spawn a series of social and environmental issues like dust and noise emissions impacting the communities surrounding the mines, a set of factors that also caused the shutdown of bauxite mining activities in Malaysia back in January 2015. The conditions for resuming production in those countries are still being negotiated, though it is evident that the aluminum value chain and China’s demand pressure have global implications. Being the third largest bauxite reserve in the world with high- quality ore, Brazil might increase its exports and benefit from that trend in the bauxite market, despite the risk of rising costs in sea freight. As for alumina, the closure of capacity at plants in the Atlantic also opens opportunities for Brazil, which holds a prominent pole of alumina production in the North of the country, supplied by Amazon reserves that are abundant and top-class. Energy The key decision factors for finding the right location for primary aluminum production are availability of competitive energy and effective logistics. Under this context, many plants were built in the 80s and up until the end of the 90s, when they were then ranked on the first or second quartile of the global aluminum cost curve. Nevertheless, as from the end of year 2000, some changes in that paradigm could be seen. The production of aluminum in Brazil, regardless of the current adverse environment, can reap prospects of resuming investments. They will surely rely on the country’s recovery of economic growth and concurrent policies and actions in place that find ways to optimize the existing natural resources and hence boost our competitive advantages like clean and renewable energy.