The past few years have seen the U.S. State of California come up short on electrical power generation. Not a huge, but a seriously annoying and disruptive set of events. More illustrative might be the events currently going on in South Africa.
While rich in hard minerals like gold, palladium, platinum, coal, diamonds and others one would think the capital would have been there. It may well have been, but factually the warning signs were hung out and the government ignored them. The people who run the only large power company told the government that more investment was needed to keep up with growth. Now the country is suffering rolling blackouts and load shedding. When you flick on the lights in South Africa, they may or may not go on and may or may not stay on.
It’s an instructive way to look at what may be happening in other countries, a kind of look at the clouds on the horizon. For other countries like China, the clouds are overhead already.
What gets cut in load shedding is usually “energy intensive” kinds of business. The big “energy intensive” industry turns out to be aluminum. Aluminum is made from bauxite in a multi step process. Bauxite is refined into alumina, which is then turned into aluminum with electricity, lots and lots of electricity. Aluminum is often though to be a kinder less carbon intensive metal than the iron to steel process, but it needs a great deal of power to be made. Recycling is much less costly but electricity driven nonetheless.
Aluminum is much admired because is also a great weight saver in making cars, trucks and airplanes. Is it any surprise then that China is now the world’s largest maker of aluminum? Most of the things that China exports containing aluminum is made there with Chinese made aluminum, and the growth of aluminum is not expected to slow. It’s going so fast that China not only mines bauxite but imports it as well. During the first three months of 2007 China’s aluminum production increased 40% over the previous year. Is it any wonder they build electrical generating capacity using coal as fast as possible?
The government in China is responding by limiting aluminum exports and increasing the tax on export from 5% to 15%. Last years increase in China’s production may well rank China at one third of world production. But bauxite is cheap and the electricity is not.
Coal has had a price run up get underway and China and the rest of Asia relies on coal for power. The environmental effect of China’s massive coal fueled electrical generation is being felt worldwide. Those dual pressures of limited electricity and coal pricing will find its way to aluminum. The futures markets are already pricing this impact into late 2008 and next year’s aluminum prices, which is a change from aluminum being the metal left behind.
Oil and natural gas will also soon be used to drive electrical power generation. Dubai plans to build the largest smelter ever. Saudi Arabia has plans for a $3.2 billion dollar smelter and Oman is planning for a $2.2 billion dollar smelter. The Saudi plan is a leg in their “mine to metal” program that starts with mining bauxite and selling aluminum, as the third “leg” of their oil and petrochemical strategy of adding value to their resources.
Reports vary but it looks like about 5% of U.S, electrical generation goes to making aluminum. But it’s primarily localized to the Columbia River Hydroelectric area and the Tennessee Valley Hydroelectric area. Note that recycling can save 90% or more over raw bauxite mining to make aluminum available.
Aluminum making might be the first hit if electricity generation comes up short. Most of us tend to think we could get by without the aluminum cans but by weight cans are not such a big deal. Aluminum is used across a very wide array of products and shortages or limits to production would have serious effects. From construction of buildings, building and improving the electrical grid, many forms of alternative energy machines and lots of other products, aluminum is a core element. The weight savings aluminum offers will be important as we go on to more efficient personal transportation vehicles.
Aluminum production may not be the best thing to be “load shedding” if utilities and government can’t get their act together and keep up with demand for power. So this is a way of pointing out that keeping up with electrical demand is more important than many first realize.
Other thoughts are that aluminum is being studied for use as a releasing agent to separate hydrogen from water on demand and researchers are looking into aluminum for batteries. In all views, aluminum is an important resource. Its source mineral bauxite is abundant and the energy to form it into our working tools could be if we think into the future and recognize what the electrical needs will likely be.