BRAZILIAN ALUMINUM - solutions for sustainable living

BRAZILIAN ALUMINUM SOLUTIONS FOR SUSTAINABLE LIVING 14 CHALLENGES AND OPPORTUNITIES FOR THE ALUMINUM INDUSTRY IN BRAZIL Worldwide, energy supply contracts for primary aluminum production plants must be long-term ones. The alternative of seeking market supply is not feasible. When the existing contracts expire, the companies need to renegotiate them in a dramatically different context compared to that when they were formalized, thus resulting in ascending energy prices. Moreover, it is more and more difficult to secure competitive access to energy resources in locations that are both remote and difficult to exploit, but which might otherwise be economically leveraged to supply new primary production plants. Allied to this is the fact that the best natural energy resources have been taken over and newaspects of sustainability in exploiting those resources have unfolded massive social and environmental costs. 2.3. The aluminum industry relevance to Brazil’s economic development The aluminum industry is paramount for Brazil, a country aspiring to join the Developed Economies List in the long run. The developed countries have pursued two types of trajectories towards the aluminum industry:  Aluminum-exporting countries that boosted their competitive natural resources of bauxite or energy, by means of long-term industrial and economic policies aimed at boosting economic development and generating skilled and steady employment. Among those are Canada, Norway, Russia and Australia, which own abundant natural reserves (e.g. energy or bauxite), as well as a strongly-advanced industry.  On the other hand, those developed countries that today are aluminum importers, at some point, learned how to use their primary industry towards building a multifaceted chain of processed and high added- value products. The United States, Spain, France, Italy, Germany and Japan fall into that category. Brazil, however, does not have incentive policies to the industry on any of the trajectories above. Emerging exporters such as the Middle East countries have shown an aluminum industry in breakneck expansion, with access to abundant and low-cost energy, hence being a vector of economic development. They are further bound to become major global exporters of primary aluminum or semi-manufactured goods. 2.4. An industrial policy for aluminum An integrated aluminum chain represents a strategic ground for economic and social development. In Brazil, aluminum should be viewed from the perspective of a fully- structured and competitive production chain, from mining to final product and recycling. Recovering the competitiveness, dynamism and investment capacity for the Brazilian aluminum industry should encompass the vision above, mainly by government bodies. In the short term, the industry has sought some conditions of competitiveness in primary production, in a way to enable Brazil to resume its primary aluminum production and reactivate those production lines that are currently shut down. Therefore, a straightforward and steady industrial policy must be in place,