Content area
Full Text
China dominates the production of AlF3, an essential commodity required for aluminium pot lines. Its low cost structure means that it is well set to meet over 50% of world market demand in 2010 likely causing the closure of some 70kt of high cost western AlF3 production. By Michael Reynolds*
The electrolytic bath in an aluminium electrolysis cell contains 80% synthetic cryolite (AIF3). Operating losses of fluorine from the cell are made up almost exclusively by the addition of further AIF3.
The recent global economic crisis brought to the forefront and accelerated trends in the AIF3 market which have been evident for some time. These trends are the result of basic economics.
It has become even more apparent that aluminium smelting should be carried out where the producer has access to energy sources which are abundant and relatively inexpensive. Similarly AIF3, which depends more on raw materials than energy, should be manufactured where the raw materials are abundantly available at a reasonable cost. It does not matter where the customers for aluminium or AIF3 are located but it does matter where the energy and raw materials are located.
The global economic crisis has resulted in an acceleration in the curtailment, and even closure, of aluminium smelting capacity in Europe and North America, a scenario very similar to the Japanese pattern of 20 years ago where now there are no major primary smelters operating. Instead new smelters are sprouting up in the energy rich Middle East, in Oman, Abu Dhabi, Qatar, Iran and Saudi Arabia.
Contemporaneously AIF3 production in the West has been curtailed and even shut down; witness the closure of plants in the USA (Alcoa) and Brazil (Nitroquimica) as well as the curtailment of production in Mexico (IQM).
Why has this happened? What's going to happen next? When will the AIF3 market stabilise and reach equilibrium, and what will this new market look like? The answer to many of these questions is China.
A profitable producer of AIF3 must have certain attributes:
A- Access to low cost raw materials, in particular fluorspar, and preferably have them under its control or ownership;
B- Have efficient processing technology and relatively modern or at least a well maintained plant;
C - Have a stable portfolio of...