Africa and the aluminum industry

UNITED NATIONS

ECONOMIC AND

SOCIAL COUNCIL

Distr.

GENERAL

E1

CN .14/AS/ II/ 2/j 28 October 1965 Original, ENGLISH

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^... ECONOMIC COMMISSION FOR AFRICA AND CENTRE FOR INDUSTRIAL DEVELOPMENT

Symposium on Industrial Development in Af'ric Cairo, 27 January - 10 February 1965

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I

AFRICA AND THE ALUMINIUJ! INDUSTRY

M65-280

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ACKNOWLEDGMENT

_'):'his study has been prepared by Mr. Samuel !'loment, a consultant put at the disposal of the United Nations Economic Commission for Africa by the United States Agenoy for

Inter~ationalDevelopment under the bi.lat,e,ral technical assistance programme.

The terms of reference were prepared by the ECA secretariat, and were discussed wi th_.

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^{' -, "}

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^{' . ' . , ' - . '}~Ir. Moment before he undertook the study.

E/CN.14/AS/II/2/j

AFRICA AND THE ALUMINIUM INDUSTRY TABLE OF CONTENTS

Summary ".~.",.'•••• l>~.l>• • • • • • • • • •;.~• • • • • • • • • • • • • • • • •

FOREWORD

SUMMARY AND CONCLUSIONS·

Conclusions and recommendations "

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Page

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1 6

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I. INTRODUCTION

Purposes of this report .0 " " " " .. " ..

7

8

A

critic~l attitude towards aluminium by developing

African countries ^{e e " " .. " "}

13

II. DEVELOPETG C'J,;-:;i:l:i:ES; Ali'liICA AND THE WORLD ALUMINIUM

INDUSTRY

The erowth of the world aluminium industry...

14

Past and projected rates of world growth of aluminium

17

Investnents, capacities and costs of stages of the

a Iumd ni.um j.~"ldustry ~ .. " " .. " .. " " .. " " .. .. .. 19 Ownership Qnd oompetition in the world primary

a Iuma.niurn il.!.2~;:'3·~-;:'Y "~ , .. ^1I " . . . . 21

Access to consuming markets 2J

Bauxite, alumina, and developing countries ••••••••• 24 Africal1. i:l.-L:'"l.:.r,:r:-ll ; 1'31. ters and export markets 25 III. THE AFRIGMT ALUNUrrUM MARKET POTENTIAL

Pr-ee crrt na.r-kots '"~ ~ ~ .. ~ ~ ~ ..

Projecting African aluminium consumption ..

Special opp~rturlitiesfor aluminium in Africa •••••••

Aluminil® ute~~~ls, fuel economy. deforestaticn and soil er-oci on a ~ ^{'. • -,} " " .. " ..

29 35

42 42

I

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put ^II' _~^{D "} _{~ ~"o ~} ^{Q .. b <} _~ ^..

Aluminium ir. agriculture, food and fibre production, and s tor<lb'J ^{<' _}~ ^{,J , • c} ~ ^{• " <>} ~ ^..

Aluminium and food storage and preservation

Aluminium, sprinkler irrigation and greater crop out-

47 49 49

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E/CN.14/AS/II/2/j

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- Aluminium and African building construction ••••••••

- A;luminium and .African transportation , ..

-.Aluminium and electrification programmes •••••••••••

53

66 68

5.

.IV. QUES-'i'IONS OF AFRICAN GOVERNJ·:ENT POLICIES .TOWARDS ALUMINIUM

- Semi-fabrication plants and factories ••••••••••••••

73

Tariffs, special taxes and commcn market policies ••

74

Encouragement _o~ specific uses ••.••••••••••.••.•••.

78

Spreading knowledge of techniques of using aluminium-

in Mrica .. ".'10-.-'"'' ._... ;- ... ~... •'~.'.'•• """" •• "" .'.'.' • • '...

79

APPENDIJI: TABLES

1. Estifuated total- reserves and other resources of bauxite in millions of tons

2. _Afripa 's,hydro,eleotric.,capaci ty -imltalled and potential 3. Aluminium--world production .py co.untries, 1963

4. World primary aluminium production, rateS of growth and geographic distribution, 1900-1963 - .

Summary of recent

va~ious

projections of alUminium consurap-td.on br p7',duction

6. Per capita consumption of' primary aluminium invaricuB courrtr-Les , 1938 and 1961, andp,er capdt a nationalin90me"

1961.

Appendix A - Private and Government Ownership in the World Primary Aluminium I~dustry

Appendix

B -

Stages and Investments in the Aluminium Industry Appendix C - Bauxite in Developing Countries

AppendiX D - Patterns of Aluminium Consumption, Developed and Developing Countries •

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B/CNi 14/AS/1I/2/j

FOREWORD

Aluminium to spme" ~~yelop:ipg countries has meant a large hydro- electric project and a s.melter r-equ.i.r irigva ,few hundred million dollars_{• .' . • • .' , ,.'. . " . , _. J - . ,} of foreign capital that only a few fortunate countries can obtain. It has also meant the use of muoh more capital than most other industries require; the need to send the aluminium output to foreign markets; and_{. , ,.. -, ' " . .} such b en ef Lt s aSi",small but well paid empLoyuen

.

. ^{'. , ' . .} ' . ,-'." t, low-cost electricity also availaple fop oth~r ind~stries and users, and sometimes reservoirs with irriga~jonprpjeot~,greater agricultural output, inland fisheries, flood con tr-oLy-and "lvw-cost" water transport to" open" up some regions for

a~ditional development.

In this report an attempt is made to show African countries that aluminium can mean" much more even if it is" only fabricated and not produced in crude form. It is a metal to help meet some of the most

.

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pressing problems of Africa--to increase orop and protein production, to store and preserve per Lshab l.e foods; to reduce malnutrition; to improve sanitary rural housing and reduce disease; to increase the revenues and reduce the costs of t:ransport systems; to spread electri- fication a~ less cost than copper; to help protect forestation' and reduce dam~ge to lands from" excessive fuel-wood removal, and to

stimulate co-operation between African countries so as to aohieve the common aims of increasing the health and p:roductivity of their

populations.

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AFRICA AND THE ALUMINIUM INDUSTRY sm2lJARY AND CONCLUSIONS Summary

1. This report is derived from another report prepared for the purposes of examining the possibilities Of establishing in the East African sub- region any of the primary stages 'of the alwuinium industry-bauxite mining, and productiOn of alumina or' aluminium-and the expansion of existing oapacitY'for various

alum~~~produotell,

^In the present version.,i,emphasis is sh,ift\3d to Africa as a Whole,' Some references to East Afrioa are reta-ine!i but are only,incidental.

2. The maximum possibilities of developing the aluminium industry in

Afr~oa are pres~tly not assured. They will beoome more definite with growth in economic co-operation between governments to seoure improve- ments in transportations, agriculture, mineral and ener~ development, and with the establishment of conditions more favourable for oapital inves:tment.

3. It is well-recognized that Africa hesthe essential res9urcas of bauxite and electricpowe~potential and strategic location to beoome a world leader tn the production of cr-ud.e aluminium for export to indus-

trialized countries. But as a present and prospective cOnsumer of aluminium, Afrioa has been at the bottom of the list of world regions.

This situation oould change dramatically if African countries would join their ambitions and rescurces UltO effeotive programmes.

4. Afrioa has 33 per cent of the world's bauxite resources but mines only about 6 per cent of the world output, also, 32 per cent of the world's high grade hydrcelectric potential, but only 2 per cent of the developed hydro-ca.pacity, and

9

per cent' of the world's population

,

but less than one ~er cent of the world's consumpticn of aluminium.

a Pre-feasibilit Re ort,

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5.

The present and propose~ aluminium smelter capacity in Africa, if fulfilled, Kould give the oontinent about

12

per cent of the world capacity. But such a development would be principally for export markets.

6.

In

1960,

the average aluminium consumption per African was about two-tenths, of a pound per year. It was much greater in other less developed regions, and far greater in developed nations.

7.

The two questions facing African governments are' (1) how much will they supply or the anticipated growth in world demand f'cr- aluminium, and (2) what can they accomplish in stimulating their own aluminium

consumption.

8. Because cif-the high capital requirements for primary aluminium production, it is important :for African countries not having ample outside sources of capital to examine critically what stages of the industry they should develop.

9.

Aluminium is a young industry, com~ercially aocepted on a wide scale for barely

20

years, and concentrated in the industrialized countries.

But many African countries already have small factories producing aluminiUm utensils and roofing sheets.

10.

Since l-1orld ,!ar II, one Afrioan country became a primary aluminium producer (Cameroun), one i5 _~oout to become a producer (Ghana), and

five have besn hoping to become producers (the two Congos, Angola, Guinea and. the UAR).

11.

Over the

60

years,

1900-1960,

world aluminium production has doubled every seven years, but the rate of growth has slowed down. Even so,

produotion of 6.1 million short tons in 1963 is expected to double again by

1975-1980,

and to double again by

1990-2000.

Such ultimate expansion will reQUire additional annual world outputs of

90

million long tons of bauxite, 36 million short tons of alumina,

18

million short tons of aluminium, and a 'lew firm power capaci.ty of 33 mi11ionkilowatt".

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12. llhilE; AfriC:1 carl C0117:'

'J,·,h to"

!these reQuirements, dthe:& oountr ies also have b:m:;:ite and e:12rgy' resotC!'bes and in addi t ron

th'~

^oa

p 1 _t~l,

cond:i.t'ions'favourccb1e' for jlweE"'cGnt, 'and tecb:hical and adffiiliistra't'{;'e per s'mnel: I&Qkir.gitt Africa.

.-,-,-:;;

13. The tro.rLd a Lu..min aum industry b'conccn trated in a few private enterp.i?:ises' cnd, G-:/V--e'i>IlinO:1.t 811'tel'p:,,'-'ises with ~rh-J.ch Afrtban'-L'bountr.tes must make arr'ahgml"en t6 ,cspeciall:r for accesa tomarkets£o:i"

bauxit~,

alu::Iina and ingot;' Gu inea , Gh1n,1c,nli Cameroun have inade"'~tibh arrarige- ments ,

rv

'14. 3ecaU3C of the r-educed importarioe of . low-cost power fOJ:" looating smelters, -tho,3G Af:"j..can ccunt.r i.c a hop:L-Jg to have their power z-eeouz-c ae .. ,

dever~;cd f~c' alumfui,iI~';:,~~ho,;.L"~do

help, should

rec,9~~~~that

^they

must compete nit:l,.oother cOC1ntricJ lihe use economic and politioal en~:oltr'~ag,j:1it:-itdto attract th8 C,2umi.J.1J.LLr:r:::i.11'dus'try.

15. Thc trcild is uT,·r:C'c. b l!frican concc:mJ;>tion of a Luminiurn , but. this

.,' _ ;, 1: ,:, L,["<- , ' , :i,i' , .

was only about 51,000 fC3',r',C to;1::;

in

1963 for the entire continent, and oniY\S,'500'mo',ric tons

c~;'

^East'

;ir~cao

South Af:rica consumed 18,000 . metric "tons, a thi:'c. of ';ho continent.aL total, as did West Africa, North AfricauG0d 9,000 ·~.OYlS•

16. There ar o at _J,ca~" .';·1 a1'l"lbiu'!l fabricating plants in Africa..

The princi:>"l p::oG.'.wt"_"' 0:' r-ost pLan ta are u.tensils and building sheet,

;-~":", . . ).- .. , . ^- .

made f'r-c.n :i.Jr?Or·ccd. j:'Got 20)(1. CJ82t. F9r. all imported aluminium,

,"-,,-

Africa spcn'c ab;mt 336 mill:0"-':" 1963/, ,Such imports will decrease

to tlie extent t~12t aJ..u~~-:15""12"_'1 :"~2~~'::,icaticn is encour-agsd , ." .<••~

17. TJ;l,e pat.tarn ,,"ild,ro,te Of growth ofalurninium consumption in Africa.

are r;fto;:,tedby _cc~'tai::.di.f'f cv cn c co in cH,riqe.n cond'a tiDns from industrial coun..trioo:. Thece ""e, par-t i.cuLar-Iy , ;:tb;e'lQ""pr6ductivity: of agriculture andiJ;J.du:;;try, 1'Iio.8::;pro3.d di.s ea ae and n a Inuteition, prevalencec'of

auba i.s tencp fi).r:,lL'1.g, ,lou literacy rate., some 50 separate" poli·tical

:'''r;c:;:~'' c; fJproJ.d over a vast Landarea lacking in sufficient'and econonucaI illtc:'nal tcc:.:'lo:;oortatior, faci1i ties, and the long distances

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CN .14/AS/ II/2/j P~eA'

18. Plans of African countries to improve ccnditions are not sufficient to ,,}p,sj;.if;y,confidentproj ections of a IuminIum consumption. The an iicip'a- ted growth pf pcpu.I a ticn, .and gross domestic 'product may suggest minimum prcJections of GQlltinentaL consumption by 198"0 between 75,000 and'1l4,00() metric tons. Production of primary aluminium now assured in Africa by 1980 already grea"Uy exceedfl such proj ectLons ,

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19. But oppon tun iti.es for tlie use of aluminium in Africa could lead' to much greateI1.Gonsumpt.ion; levels. These· offer room for government

will help reduoe'imporis exchange, and make better The opportunities also are progxa!l!lIles to,enGourageuses where aluminium

of less essential gOOds, conserve on foreign resOUroes.

use of limited domestic _capi!a~

for _alum~ium to make irnportantcontributious in agriculture, food preservation, sanitation, health,transport,h\lusing, ;,electrifioat,ion,

and

na~ional

well-being. ,' ..

20. The greater use of aluminium in utensils should be encouraged

iri"'''''''

order to help reduce the ,waste of fuelwood in Africa. This waste contributes to widespread deforestation, soil sr-osLon , impaired agri- cultur;'l productivity, flood damage, and loss of ground wa t.er resouroes.

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Such damage is greatly affected by using for fuel 88 per cent cf all_. .- ^{" ,} wood out in Africa, and by inefficient ways of,using this fuel, includ-

ing wastage in utensils that conduct heat much less rapidly than does aluminium'."" "

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21. The productivity of a~iculture in Africa and the inoreased.

consumption of perishable foods can be greatly helped by wider use of aluminium. Aluminium roofing on agricultural buildings, compared with other materials, has been demonstrated to give cooler ·temperatures and signifiCarlUy :to' :increa~~ the output of farm animals in milk, eggs and meat for con suaptaon ,' Aluminium and other insulating materials permit safe -trari~port, storage and preservation of perishable fOOds for greater protein con sunptIonj ^ra major need in Africa. Aluminium pipe has' helped create the system of sprinkler irrigation which is much more efficient :in the use o:fwater 'thanc6h;;'entional gravity irrigation, and has

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demcn s tr-ated inct''3as^{p ,} ''1 _G~OP output thpt h"vc: paid for the investment., The system is especially "c'~apted to water an d Larid erosion pr cb Leras of Africa. It· may a Lao help :t'educe -the ['prB'ld of 't~le di s eas e , bi Iharsd.as-Ls , that now ar'fect s about 'o!le::'third of the p(i:9li1.cJ~tion of .tl.fricCt~

22.

The greater UsG

0:

allITDinium in house roofing would make for cooler and healthier C::"elUngs.' Pal'ticularly in replacing tll""gra.ss r-oof", it would elin:Lnate o.io cf thc sho,lters ,for/ector" of d.i s oaue , Aluminium is more economical aLthough initially higher priced in mcst countries than galvanized Lr-on , I'G gives much longer Lr.f e at Lower cost. Some governments have adopted roofing programmes;' and the extension

of

^'this

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principle to African 'Public housing deserves careful consideration.

23 .. -African' g.oV52.·nI:l2nt ag6:1cfes":o:oncerned with '·ilive-s·~taentanc mainten- ana,e of public roo,ds 2:~d "aiJ.:!:'oil,(l,s; shocId ca I so consider the promotion ofth'egreate:c uge of e,lU"liniti,'Ji'. The bcnefi ts havo been proven in, many coun:tries to inol')Jle :'educ_c::LC9-$,J~~i:'of 20ad repnir and mc;,j.nt8nanc~,~.·^of'

r-e-;duc:e'd vohic13 00;"1'[.3 of 0pe:t':a~t'i:eri)e.ncl maint en an c e , and gretiter revenues ','.'~'.i-Gi..;! ..

f'r-om ,·a. lar:ger carrying capac.ity .par vehiclc using alurlinj.,um., On the onEPrtietre an d narrotTer gauge raihrays of Afrioa, inclmiing four'East African ccuntri es , a Iuminium in r ai Iway (;2.;... 8 trou Id j-ncrease safety and :permit· greatGl' .:'peac..s anu .l:8dliced 'costs oI vpLi:ation.

24.

Electr~_c 1'01H:~::' e:en8ration, tz-an s.a.i s s i.cn , and consumption in

Africa tri.L], offci.' g~-:OWi.llf,' o:9portunities whf\~.'e aluminj.u:n has be en pr-oven 8:Ji}J8 large pover projects, rq.'.~lway

~'--;''i :.,.I. .~

e),req,t~~i~iCJ.tlo:"l, ;:~1.d .br-cncmd s e Lon Li.n« con"strl~,ctio::l acr-oas nS. tional bbu:ridar ie's , Hill requir c ao-operativ8 arrangements betVleer. governments.

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Conclusions and reu0',.,.iLdlii_~lon8

?5.

'I'o promote gcl'eater aluminium consumption, and manufacture, African countries will require a more consistent and constructive tariff and trade pclicy than is nc» pr es ent in osr-tain countries.

It,is recommended that African ccuntries undertake a conference on the subJect of aluminium development and the adoption cf oonsistent tariff and cther trade policies related to aluminium.

26. To encourage the justified greater Uses of aluminium for benefits·

to African agriculture, housing, forestation, transportation, and electrification,

It is recomlIl§P-.<18d.

~"a-<; th~Afric8n

governm'ents est<tblish a .p:ermanen t in tergovernmen tal commi ttee to formula to a programme

to (a) determine the desirability ofprornoting certain aluminiuni:

'us es , and (b) to define the policies and programmes recommended.,.

It is also recpmmended that the governments establish an aluminium industry advisory' commi t t e e f'r-om enterprises operating in Africa to supply t3chnical help to the intergovernmental committee and that anc~her industry advisory committee be established represent- ing materials cornpet a tive with aluminium so that aluminium . policies are checked against criticisms, and ^SO that makers of cOmpeting materials are encouraged to improve their products and reduce 'their costs and prices.

27. To prevent the misuse and misapplication of aluminium products as experienced in some Af'rican and other countries, to the detriment of aluminium mar-k e^t c ,

It iR TeCO'-jfl1BY'.dcd. t~~1.t the African gcver-nrnent s include in their :PrOgramm~sfor"aIuminium, with the help of aluminium enterprises,

the po:pularization an d instruction of people on the proper waysQ!

installing ,md t.. .. aluminium, and th.e adoption of quality stand- ards by producers of aluminium ·products. '

28.

It is concluded that building the aluminium industry in East Africa involves common problems for the various governments and can only be achieved for the maxinum welfare of their populations by intergovern- mental co-operation in policies and programmes.

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I •. INTRODUCTION

Purposes of this report

1.

Th~srejlo:rt

is derived from another report-!/pJ:'')pared ff'r the purpose of examining the possibiUtiesin the East African sU':-rogioll of :stat,lish- ing any of the primary stages of :thealuminium industry' bauxite mining, production o ;' alu.mina,., ·andjlI;'oduction of the crude metal. In the.

present version, emphasis is shifted to Africa as a whole. Some references to East Africa are retained but are only incidental.

2. These possibilities are a.luo examined from the p"int of view JIlf fitti~g the alumi,nium industry wi thin broad.er development goals of countries by.the period 1975-1980.

3.

It i'sLopee. that

0ov~rnments in Africa

this report may as.:sist the ECA and individual in shaping policies towards the development. of the alumi'nium industry, and in making decisions towar<s the undertaking of additional studiBs. Particalarly, i t is hoped that this report may stimulate some African gov.ernments to investig2te where the 8reater uses of aluminium may be justified and encouraged,. as comp--r ed "i th other

,'materials, in contributing to improve health "nd productivity of Africans, and in obtaininc a larger output or reduced costs in agriculture and some other industries.

4. This paper is preliminary and not conclusive for two r-ea-ons , First, only a very limited time .has heep availablo for its preparation, about .vtwc. months. iSecond, and more important, the maximum possibilities of

deveLopLng the; aluminium industry in ,Africa, as with some other. rndust r i es ,

ar e. presently not assured, 'rill only become more d efini te "i th the establishment v:findustries more favourable. for capital investment and the growt'h of economic co-operation between African governments. The gTeater the stability and co-operation, the more will be speeded the essential conditions in wt~ch the aluminium industry can best thrive.

il

East Africa and The Alu~inium Industry, (E/CN.14/INR/100)

,:/C~T•

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The conditions include improvements in develdpmente of agricultural, mineral and energy resources, and the internal transportation arteries of rail, road and inland waterways. Improvement in, thcs e areas will increase demand for aluminium and the numb er of industries fhat can share with the aluminium industry the joint costs of power stations, transport, conmun

,

i,ty hotlsin:; and. health, and other factors' cf the^' infra-structure. The more irldustrialized. countries of the world have demonstrated the importance of such relationships in building up their leadership in aluminium consumption.

Africa and aluminium

5. It has been increasingly recognize4 since the end of ,:orld War I I that Africa haS the essential resources of b~uxite and electric power potential and also the strategic location, for becoming a world leader in the production of crude aluminium for export t c the .i.ndustrLa'Liz ed

countr~es. But as a consumer of aluminium, Africa has been at thsbottom of the list of regions in per capita consumption, and is still' regarded' as being at the bottom of the list of those to use more aluminium. This' low ranking reflects past experience and present circumstances, but could very well chan ge dramatically if the ambitions and rich resources of

many African countries could be joined' into ef::ective'deve'lopment progra mm€s.

6. In bauxite, the basic raw material of aluminium Africapos~esses

one-third of the combined reserves and sub-marginal resources of the vror-Ld, The laruest par-t is found in Guinea where the reserves represent the~ost Imp'ortant volume

of

hibh gr:ad" ore anywhere in the ·"orld. Also in ~st Africa, bauxite is known in AnGola, Cameroun, Congo (Leopoldville), Ghana, Mali and Upper-Volta, the Ivory Coast, Morocco and Sierra Leone.

In Cast Africa, bauxite is found in the Mala~asyRepublic (Maoabascar), Mozambique, Malawi (Nyasaland) and Rhodesia. Fnr additional details, see AppendiX Talle 1 showinG the world reserves of bauxite as known in

1963.

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E/CN • 14/AS/II/2jj Page 9

7.

The African bauxite resoUrces have been ~sed but to a minor extent in relation to the 'world share of 33 percent. They contributed only 6

IH~r cent of the world's bauxite output in 1963. Most of this production was converted into alumina in G~inea and shipped to European aluminium

',

smelters and'^"to the one smelter in Africa inth~, Cameroun. Afriqa' s share of'the wbrld's alumina production converted into aluminium was little more than! 4 percent. However, the role "f Af'r-Lc a^vi.n bauxite produCtion is likely to expand considerably in a few years due to,new developments in GUinea, an.: minor ones in Sierra Leone and Ghana.

8. In sources of energy for low-cost electric power for aluminium production, Africa is out_. _ _ •••.. _• . . . u,,· _ _standing•i,!J,~,J:lydroelectric_ . potential. This potential is wiQely distributed in West and East Africa._{. .-}~",-,-'_.._, _.---_.. Based on recent di s cover-Lse , pe t.r oLeum and gas r es our-cea are" now ample in North Africa and may yet'be'found i,{ economical quantities in East Africa. Coal

• • ._ • • _ _ . _ • •-• • • • _ -• . . •- ., . - - - - ,- ~,• . • . • • ,- • • • • • • , . • _ _ .•0 " , . t, ;

resources in South Africa aFe also outstanding and permit production costs as low as anywh.e,rej!" tll\', ;torld. Afl'ica-·lik-ewise shares with Canada an,' the United States the possession of most of the worldIS

known uranium and thorium l'eserVes

fo~,nuclear

^power.

!I

9.

Natura~ ,gas in Algeria has interested one aluminium company for some years as a possible s our-oe of power for a smel tel'. llut it is' in the hydroelectric potential that Africa has drawn most' atten'tionfor' ii1;;"sti- gations of aluminium possibilities.

under construction in Ghana (Volta),

These have included hydr~projects

ihe UAR (Egypt) (Aswah)

and' _cO~Pleted

projects "in the Cameroun"(Sana-gil) and' Zairihia-Rht'ldesia (Kariha) • They

~ - . '

have also inCluded proposed p~ojects in Guinea and the two C~ngos - Brazzaville and Leopoldville. Based on hydropower, on aluminium smelter operates,in ..the Camarounvvone is under coi'iiitruction in Ghana, one is planned for the UAR, and one has been proposed for Angola.

dis,cu-s:~:i.Qn.,- see :~conomic

Pros ect s"o'f''ElectriC":

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E/~.14/AS/ll/2/j Pa8"e 1Q

10. While the developed hydroelectr~c, capacity of Africa was Gnly'two per ,cm1t

of

the; wor-Ld total in 1962" tlle higt 2Tade pot;,ntlar (95 ~~ of the time) was 32 percent,

gTe~,ter'thanany

other continent. It is " , ' I '

, . -.' I '

this', potential, particui~;lY^{-the conc}en t.r-atn on of much of i t in the Congo'River~ and' the presence of the African bauxat ce , that will continue"to sustain the interest in &r~ater aluJr.i,nil,'rJ), development in Afrioa for years to come. The following tabulation summarizes, the

position'Qf Africa's hydroelectric resources in the world, and Appendix'

,;

Table 2' g'ives the details for each African country.

't •

_~-'-c_,.TABLEI"'l

. 'l"

riorld Hydroelectric Capacity, Installed and Potential

Estimated gioas theoretical potential '(rolW) Installed

capacity (Appr0x, in JIlW)

Dec.

31, 1962

.,~

, Q 95

2,1

^Arithmetic

mean America: s :

- North, Central and, West Indies _'~.. : ..

-S.?t!th ....•...,...".~...

Afri ca ^O'.-:"'i" ~'.," ,' .. " ..

Asia "'of - 0_ .

Australia and ?A).eania " ',' Eur-ope ••••••••• ~ •.•• ~ .• •^{i• .}

TOTAL' .

Africa's per oent of total

,~,',

61,23() 6,865 3,185 .

19,992 '

.3,860'

85,806M

"

180,938 1.8 %

90,065 50,750 176,677 160 826" ,

18,600' 54,681

551,6('5

32.2

'f~

;' I'

270 ,q ⁸⁹

471,350

, ,i ,',',

684,680

,

944,153

. I . '-ie,

143,750

i"

209,505 2,724;044 25.0%

a/ - Available

95 '~er

^o.ent of the time.

- ^.,

EI -

Includes I,sian US,jR. Most of the USSR developments are in Europe.·

Source: Loyd L~,Young, Summary of Developed and Potential Watcrpowe'r of the UM'ted States and Other Countries of the World, 1955 1

962,

Geological Surve'y Circular 483, US'-Geological Survey, Washington,

1964, p.?

E!CN.14!As!n!2jj Page 11

. ..

11. -Ln 1964, Africa had only one' primary aluminium' smelter. Located, in the Cameroun, this smelter with 57,000 short ton~ of capacity gave Africa less :than one nc'r c.-: '; of the world capaci ty. The Vol ta smelter under construction in Ghana will inirtially add about 115',000 'tons more of capacity 'Starting about 1967 and 165,000-250,000 tons. ultimately.

Anothe~ smelter is probable in the DAR at 22,000 tons, and additional projects have been proposed at different times in the past 10 years aegregating 1,118,000 short tons of capacity for Angola, Guinea, and the two ConGos. If all of thee projects were fulfilled, Africa would have about 1,447,000 tons of capacity or about 12 percent of world capacity eXisting,under .cons t.ru cti on and proposed, as known in 1964.

Details are given in AppendilC A, 'I'ab l e A.

12. On the other hand, Africa is a long "ay from having any substantial internal markets for aIuminium. Therefore, most' of ',; he capacity of crude metal no" committed and p:vactically all that has been proposed is based on the intention to meet demands outsVe of icfrica., The' achiev- ment of inc'ependence by Afri can "countries cannot i or some time bring any major change in such results as far as aluminium exports are

concerned because it ,,'ill take much' ec onorrd c development wi thin Africa to build

uPJ.'!rte.

interYl.a~ lpa,!:!<,."ts fOFalU)l1inium.

13. In 1960, it waG estimated'·'tIEft''if''rica'MdthEfilid-East consumed the equivalent

of'

only"i?,060'sho:!,::f'fonso:f'primary aluminium, or less 'than one, percent of w_orl_d,,<00ns~mp.tion. Much of this was used- in South Africa.

The average consumption' per African "o,s on the order of two-tenths of a pound of aluminium vel' year. 'rhis is ~ml;r a, statistical figure, of course1 . and misleCldinD~ sinco most Africans used no readily identifiable aIum.rri.um pr odpcts , fly comparison, ho vov e r , the static tical average of aluminium usaU' "C8 much treater in ather less deveJoped reeions of the world, such as one pound per person in Latin' America',and seven-tenths of a pound in Asia anTI OC0ania~

;jCN.14/A

s/n /2fj

Page 12

14. A substantial increase in coneumpti on in Africa to more than 55,000 short tons is estimated to have occurred between 1960 and 1965 from the import data available,' The projected demand for tile Mid-Eas.t and

Africa fo:r 1970 of 55,000 tons as estimated back in 1960, has now been exceeded. The per capita usc of aluminium in Af:rica has improved slightly, but it still. isbeloH four-tenths of one pound per ycar per pers on , at the bottom of

t

he .list of wo:rld regions if South Africa is considered separately. The industrialized regions of the. world are expected to continue to ma.intain their Lead er-ahd p in per capita

consumption of aluminium •. The summary t2bulation that follows of world consumption and projected consumption to 1970 can De i.nte:rpreted as ^"··;0 questions posed to the African governments;

(1) - how much of the anticipated growth in world demand for aluminium will Africa supply ; and

(2) - what .can Africa accomplish in increasin(:; i tR own aluminium consumption as it moves to close the wide eap getween it and the·more developed nations in consumin", a wide variety of goods and services.

rrojAction of Total nnd World pAr _C~pita Conaumption

of Prima:ry Aluminium, 1970

1960 1970 Thousands of

ahort tons Pounds pe:r capita Region

North America ••• ⁴ • • • • • • • • • • •

Lati.n America ^{'O ..}

European Common "Ma:rket ••• , ••

Othe:r Eu:ropean count:ries ••••

Mid-East and Africa •••••••••

Asia and Oceania .•••.•.•.•.•

USSR, China and othe:r

communist countries ..••....•

Total wo:rld

2,210 94 560 481 29 245 1,040 4,659

. 4,3

65

293 1,257

854 _I

55 .e;

614 2,750

10. 188

1950 11.3 0·5 2.0 2.8 0.1 0.1 0.6

1960 1970 22.4

36.0

1.0

2.6 6.7 14·1 6.2 10.1 0.2

0.3

0.7

1.3

2.0 4.4

3.2

6.0

2...l

Exceeded in 1963

Source: Kaiser Aluminium

&

Chem,cal Corporation, Nov.6, 1960

;:;/CN.14/AS/II/2

/j

Page 13

15. It may be emphasized again that to the extent that independent African countries choose to supply a substantial part -of the outside markets for aluminium, they will be following the previous pattern. There may be a difference in so f'r r a:; tho countrie~j Can r ct ai n .wi thin. th·:::ir ovnvbor-d e.ra .« a ~reater share i~ taxes and profits of the valueproduce~or alternativ~ly

obtain in exchange. :f,or .aluminium more imported goods and services desired to build up the African economies. However, the. Pfrican countries will cepart clearly from the previous pattern to the extent that they build up their o'm consUmption ,of aluminium and particularly in those uses where the metal do eO a:better.job at lower lifetime cost than alternative materials. Whe:re such uses can be developed, governments ,,'ill be promoting aluminium, in its most .effactive ways to increase the welfare of the

popu l at ions and the national incomes.

A critical attitude toward3 aluminium by developing African countries 16. The primary aluminium industry requires far more capital per

unit

..

of output ond pe: employee thEn most other basic industries. The large, capital investment, therefore, constantly ;oses to developing countries

·C,:

the question whether the promotion of primary aluminium production, comp-.r-ed to al t,rnative needs for industrial development :represents the

[

best use of s cs.rc e capital. This problem iL more important when some

...,·r",,,: ^i"0-

of th,e capi tal rmrst be supplied Inthin -tl.e country and less important wh,m much of it comes from out ai d e sources. A cri tical att ;tucle t0wards

,.

the stimulation of each phase of the aluminium industry is particularly justified where there may be a tendency to be carriei away by the specta- cular growth of the aluminium industry in t"is century, and to fail to examine the differences in values of aluminium to developed countries

;

...

and to developing countries. It may therefore be helpful to briefly examine in the next section the'position that d eve Lopd ng countries have thus far occupied in t h e vsp ec'tacu Ldx ei6iith 'of thA world aluminium industry, and to consider 'yh'tt that position can become if the con- tinuation of t.his world 'growth continues.

---~"'" ~,'"

E/CN.14/

AS/ 1I/2/j Page

14

II. DEVELOPING COUNTRIES, AFRICA AND THE WORLD ALUMINIUM INDUSTRY

~e growth of the world aluminium industry

1. Commercially, aluminium is a 'very yeung ,metal, new to the 20th century. Its world acceptance on a large scale is barely

20

years old.

World production waf! very small until, the decade of, World War; II, as is shown in thefollowirig chart from a paper prepared for ,the 'Uniil"ed Nations Confer-enoe ion Tra.aeand Development (1964). In the next 10 years after, the Wa:v, world output of aluminium leaped ahead of copper, lead and zinc. It became the .Leadd.ng metal in the United States ,after iron and steel; its uses stimulated greatly by effects of the War.

2. To prepare for World War II and tbe use of aluminium in aircraft, Germany J1Y_,1938 was the large?talumini,l,lIlL producer. But the United States rapidly oaught up, went far ahead of Germany, and increased its aluminium industry by six times in order to produce 100,000 aircraft in the peak year of the war. Out of this experience and the training of over cne million workers to work with aluminium, the United States laid the foundation for the popularity cf aluminium. This popularity then spread world wide. It moved to other industrial countries on a large scale and then on a very 'small scale to countries'that for centur- ies had known only the older metals, particularly iron, copper and bronze.

Thus, tOday small factcries in Africa are producing such aluminium pro- ducts as cooking utensils and rcofing sheets in Algeria, Cong~ ^(Leopold-' viile) , Camercun,' UAR (Egypt), Sudan, the Ivory Coast, Ghana, and Nigeria.

Such products also are being produced in East Africa, including Ethiopia~

Tanzania, Kenya, Burundi, Rwanda, Uganda, Zambia and'Rhodesia.

3. At the, beginning of World War II,:eighte~n cou~tries incl~~ing the principal industrial nations, produced primary aluminium._{• I "} Seven more countries then follol"ed between 1941 and1963. :;>ix other countries are shortly to have aluminium smelters fo!, the first time. At least. thirteen others in Europe, Africa, Asia and South America would like to establish aluminium smelters and have taken steps through their governments to promote interest in the ultimate construction of aluminium plants. In

••

J t

INDIAN OCEAN

•

_"

,

AFRICA AFRIQUE

,

I I

" I

i --... .r

/ I

,

,

1\.../ r ... "'..-.

_

^...- ; l , l

'SOUTH ERN~

'_ ..r- _?...:>..""',,..

<r:

-r

I

N O R f

• ....co

o C E A N

."

- ^.

A T L A N T I C

A PRE-FEASIBILITY REPORT FIGURE J

REGIONS OF AFRICA

. .

^'

^, _•

F

I I

I

EA.ST AFRICA AND THE ALUMtNlUM INOUSTRY

'w

E/CN

.11[/AS/II/2Jj Page 16

most of the eighteen oountries established as older crude aluminium producers, plans are also being made for additional productive capacity.

,

, ^{4. The actual}

since World War

and pcssible spread of production of crude aluminium II from the older industrial oountries to the newer develcping economies is shown in the following tabulatiOn. African

Eighteen countries produoing orude aluminium, beginning of

Worl~ 1~ II

in

NORTH

AMERICA United States Canada

EUROPE Austria France Germany Hungary Italy Norway Spain Sweden Switzerland United Kingdom USSR

Yugoslavia O'mERS China

Japan inoluding North Korea and 'll>iWBn

Seven new produoing oountries

between 1941 and 1964

India (1943) Brazil (1951) Czeohoslcvakia (1953)

Poland (1954) Australia (1955)

Came!:~

(1957) Mexico (1963)

•

Six oountries beocming new

produoers 1965==1967

Rumania (1965) Surinam (1965 Venezuela (1967) Greece (1966) The Netherlands (1966)

2~~

(1967)

Thirteen oountries hoping to develop

production

Argentina

~~

(Brazzaville)

Co~

(Leopoldville) Ioeland

Indonesia Kuwait New Zealand Peru

Philippines

~:!:~!.2~~ol~

Rep~_~~~~

Turkey

~~t)

E/CN.14/AS/II/2

h

Page 17

L.~

" ' ,'-",

...

countries

are"'Undorli~ed.

^T",a actual' 'p;oduction of crude aluminium

.~,:".\

in 1963 in each country is given in Appendix Table' 3 •

. 1..:

5.

Over'

th,,' 60 year perioCl,'190Q-lg60, world aluminium production has advanced a'tthe!innual compotfudra te o f l l per cent per yeear. This has been the equivalent of d'elna"ild d.'dubling every seven years. There

have been s'6me var'iat'i6ns in this

rat..

'of growth within different decades, but, in the mcst recent peh6d', 1950-1963,- the r-a.te of growth also averaged 11 per cent per year. _Howev~r, tlie'gxeater' part'of the growth took place"

in t~e five, Yllars, 1950-1955""" p<J.rtly, s,timulated by the, Korean yar.There was .a sharp faJ1-qft il'} gro~rth petween 1955 and 1963., A resUlIlP,tipn of a high rate has taken place in 1964/65, .but, various estima.toz-a do not expeot the longer term to see acontinuat;i;onof tl!¥', r ate of 1.1 peF (~e~t

per year., The record of wOl;'ld rates of gp,o".th is gi~I:Lin Appelldix Table 4, up to the level cf :tl.l million "'~~:t' tonsreacbe,d in 1963.

6. I t will aLso be no ted in that Appendi'l 1;hat the non-Communist coun- tries ccntr:Lbute'about'three-fourths of the'current worldproductioh of alumix1ium,'andtlie Ccmlin1;h'i'i;tcountrills the balance of 'almost one- fourth. The USSR has advanced r~p~qly si~c~ ,194Q ,to p~od~oe,~bout17 per cent of the world primary, alUIlltniumsupply,. and, i;~relative posi-

tiO,<l of,theU~ at 38 percent ha,:B,'c\>ee~',de.cl,ini,ng',:f\lig.Qtly. The other non-Communist cour.tr-Lea pr-oduce. 'the;eam'e pr-opor-ti.on as the Us.A., and this has also been declining slightly since 1940. In the emergence

- ' , ...•.' . L .

of the USSR frcm an undeveloped status to one of the leading industrial

,',.

ocuntries of the world, aluminium has been given a prominent position.

I t had been the target of the Soviet 7-year plan; 1959":1965, to achisve an annual rate of increase in pr-ouuct Lon o"f '1'6' p'er 'cent but this was not reached.

7. A study of projections of demqnd for, and consumption of, aluminium

,'\ ji,I."'; 1 ' • • . .

o. . .' . :

made by various organizations and experts fcr the tror-Ld as a whole and for various regions and countries was completed in 1965 by a US Government agency. This study concluded that for the next few decades for the

world as a whole, a slow down is expected in the rate of growth of

____...----u..-...

+H,

" ' < ,.

( '"1 " I , .

E/::N •14/AS/II/2/.i .

Page 18

aluminium

productfo~

to a level between 6 per cent and· 8 percent per year; for Western Europe,

a

rate annually between 4.7a.nd

7.2

per cent;

for the USA between

5

and 1.Q P5'.! .cent per year Land for the developing

-"'."-. '-'--

countries of the

USSR,

Japan,.India, and Australia, the highest figures between

9

and

f5

per cent per year. In general, consumption is expected

to grow at faster ~ates though from lower levels in the less developed countrie""than in the more developed countries. Contributing toa slowe.

[ . ' ,

down i~ the rate of growth in aluminium consumption in the USA is expected ito be the increasing competition from other materials and the more mature s.tate of.over·-all development. A summary of the various projections of; demand and production appears in Appendix Table

5.

.'

8. From the 'Viewpoint of Africa's developing countries, the opportunity will be open to aupp.ly to the growing world markets for aluminium includ-

ing their own markets, the. raw material bauxite, of the intermediate product alumina, of the.crude aluminium itself and the electric power needed for the aluminium. The projections look towards a d.oubling 01:

the world demand. for all these factors in every 10 or 15 years for a few

decade~,.

This means that by the year

1975

or

1980 the~orld

^as'

a whole may roughly double its

1963 re'lui~e~ents

fo-r'the aluminium industry... These wi;l.l the n call for' addi tional' amoJnts each. year of:

....~_:.e.l_ectricity ..'...."...,...

-' aluminium ..^{0 • • • • _.}

- bauxite - alumina

...

^-'.

^{.'. :} ..

30 million long tons 12 million short tons lei million kilowatts 6 million short tons

of firm capacity

;".

I f the worldaluminium'-delliand Were again to d.oubIevby 2000, the additional' inriual quantities'~e'luiredabove would be approximately as folloWS:

....

^"

...

electr'icft";y ~ ....

• the years.

1990-

those of

1963

90

million long tone 36 million short tons'

32 million kilowatts of ·firm capacity·

18

million ehort tons

...

bauxite

alum'j~riii"

.', ••••••••

- aluminfik

; .'-

' I.-'

..

E/CN.14/AS/II/2/j

Page 19

9. There will also be important additional quanti ties of other materials needed for the growing aluminium industry, particularly car-bon electrodes from petroleum coke, synthetic cryolite, soda and lime cr caustic soda, and fuel for the alumina plants. Developing countries can likewise

,"".^,

contribute some of these req~irements, but the principal opportunities for them are in bauxite, alumina, aluminium and electricity.

Investments, capacities and cos~s of stages of the aluminium industry 10. A brief description and flow tharts vf the stages of the aluminium indu,try and examples of investmentrequitements _a~e given in Appendix B.

The charts are from a comprehensive analysis of requirements of materials and investments for operations of different capacities given in a United Nations document "Pre-Investment Data on the. Aluminium Industry" by'.

Jan H. Reimers, prepared for the

UN

Centre,for Industrial Development, (ST/ECiIA/CONF., IVL.24,· 28 January 1963)

~

Another summary of the

economics of the ~;r1d aluminium industry appeared as a paper contributed to the United Nations Conference

en

Trade ana Development, Geneva, 1964,

"Aluminium as an Export Industry", by Professor HansBachmann (E/CONF.46/P/IO, Contributed Paper 10, 4 February 1964).

11. Among the conc1usicns to be drawn from Appendix B for developing countries are the follo'ting:

(a) Bauxite will _contin~e to be useq as the predominant raw material of aluminium

,0

long as it i~ a~ilable at acceptable costs of pr-oduotLon at the shipping point (commonly between US $,2 and

34

per )cng ton)',

phis;th~r

costs including royalties and taxes pied to the producing country, and shipping costs to the rec61ving points. Substitute minerals are abundant

.

but more cortly to use at present than bauxi teo The industrial- '1zed co~tries are bEcoming increasingly dependent upon coun-

tries in 'b a tropics for bauxite.

(b) Oapacf,tie'> and industry COver

pr-oduc t.Lun costs at different stages of

:;.'.,

a wide :ange throughout the world, The the smelters include plant" with less than 10,000 tons of annual

E/CN.14/AS/1I/2/j Page 20

:'oity per year,

tion ⁱⁿ Ghana •

.! ,-:

oapaoity and ply.nts w.ith

1qp,000

tons and

mo

re , Recent.oosts.

per po).llld ofill&'0t at the s'\l"llterhaye bee!, as low as

US

14,1 per

pound

and.al> high as 27p.. .Int;ernalprices

.have

be.en all . high

.as

37r£when the. world price of metal g..elivered a"3Where

from Canada was as low as 22 1/2¢. Proteptioniem

hasper~it;ted

lImall smelters and high pricel! to serve

dc~stic

markets,

but not the ability to ccmpete in international markets.

;.^-,

Hcwever, the worldwide tendency is to build larger smelters tc reach optimum levels such as 100,000 metric tons of capa-

" _ 1

illustrated by the new plant under

_const~?-

,.'

^'

(d)

( e.)

An

int~grated

smelter cf. such capacity in

the'UnitedS,tatee~

...- ^{,'----' .}

--

_.

including foreign bauxi.temines, a

US alumina,pl~nt,

and :US powerpl'fl'nt, could require. an investment of, the order of,.,,,' US$140 million, or. $1,400 ,Per metric ton, .or, even more.

Inthisc i:nve'stment the bauxite development could represent'

$16 million, . the alumina' plant $30 millioh, thesmel ter $70 million, and the power plant $24 Jilillion if thermii,or $72 million or more ..if, hydroelectric.

(f) Total employment in such an integrated enterprise would be • . smal,l, as little as 2,000 w()rJ,ters, each requiring an invest-

"

..

^{" -} .

ment,of, at least $70,000.

(g) But a high GOst and proiec;t;ed'integrated enterprise, as in India,:has operated until recent

ye~'s

with a smelter capacity less than 6,000 tons, alumina' capacity of 14,000 ions, and fabricating mill with a total historical

investmel~

cost of under $10 million. Such an enterprise could not compete

internationally.

(h) The principal elements of cost of ingot delivered to market

are alumina, power and transportation of all the component

materials.

'.

E/CN.14/AS/II/2/j Page 21

(i) Ma~ plants produce fabricated aluminiumprcducts in develo~­

'ing countries with small oapacity below 2,000 tons per year, and individual investment in shops between $50,000 and a few hundred thousand dollars. As capacity inoreases and also ,diversification, the investment rises into the millions of

dollars. Employment per unit

of

capacity and investment is many times greater than in the integrated smelter enterprises, on the order of at least 10 times as many jobs.

12. To the developing countries in Africa, the future '~owth of the world aluminium industry poses a number of questions:

(a) To what extent will Africa supply bauxite to other ^regions;

: ,

(b) To what extent will Africa integrate further to supply alumina and metal for export; and

(c)

To what extent will

Arr:i.c~'

develop its internal oorkets for

aluminium. ^{~. '}

13.

There are no illl'vi tabl e answ ..;rs to these quee.ti.ona that w9uld follow simply because Africa has abundant bauxite and energy resouroes for

low-cost electric power. Other countries also have suitable bauxite in ,substantial quantity. Rarely do they have the same low-cost power potential at major hydroeleotrio sites as does Africa, but some have eoonomical fuel resources. In addition, the more industrialized ooun- tries have relatively acceptable power costs from some fuels todai and possibly from nuolear power tomorrow, so that they can locate and are

locating new smelter capacity within their own borders rather than uniformly trying to place such capacity olose to the bauxite sources.

Thus, there is oonsiderable freedom of choice for the location of the alumina ana: alUminium plants, and only a more restricted freedom when i t comes to obtaining bauxite.

,Ownership and competition in the wo.ld primary aluminium industry

14.

The opportunities for Africa to pal ticipate in the aluminium industry are conditioned by the relatively feu p:'ivate enterprises that control most of the world indus try, by the some' rhat expanding role of government

.E

E!CN.14!As!rr!2!j

Page 22

" enterpr:ises±-" some ccuntr-Le s , and by the willingnes;'" of man;y govern- ,ments to promote the' private or public industry

,01

th subsidies or other --fOrms of assistance • . These cireumstances placee. handioa!, on man;y

African countries who^I

'(a) Lack the large capitai and other resourceS to offer to either private companies or government enterpris~s of their own;

(b) have yet to achieve the political stability and security needsd to attract a maximum amount of private investment, or investment· from foreigri government enterprises if 'thil!

is desired; and

(c) do not 'yethave their oW!Ftechnical experts and administra-

ti~ personnel capable of establishing and operating the stages of the aluminium industry.

15. A description of the structure of the world aluminium industry is given in Appendix A. This shows thQt two-thirds. of the industry is owned or controlled by private companies, and a~most one-third by

..

governments, mainly the Communist governments, Outsio,e of the Communist area of the industry,' only six companies control or influence

.

^'. . .

by'mi~qrity

,.~. .

interest most of the 'prctmary productive capacity. Ten small private

companies own about

li

per cent of theu,apao,i ty, and non-Communist govern-

ment~

about 10 per

ce~t

^•

..,'.

16. Appendix A also reviews the_.

.

^~

.

i~tensive rivalry between the leading p:r;ivate cornp!\!lies.to gai!lposi tions in various markets of t·he .world,_{. ., . .}

and the grpwi:n.gpractice to share i'lvestmed risks through joint ventures.

This practice i~cludes joint ventures between private companies and governments, and .•acne mutual assis tanee between govarnments , 'l'henumber of governments participating directly in the. industry is increasing although they usually call on private enterprise for, help. Some,govexn- ments have encouraged the de"elopment of primary. alum~nium capacity beyond

til~'needs

(of the d"me, .tic ma;ket, and have

looked _t~wa:r'dg

^export

. 'marke ts..toab'sorb the aur'p Lus even if .i t is necessary 'to sell the metal at discounted price levels. 'wwever, this means reduced ret~n on

.'

E/CN.14/As

/ n /2fj

Page 23

investment to both pr~vate a.nd gover nmerrt ,aluminium enterprises,' Under

• ; , . ' . ' , c- \- "

tempora.ry oondi tions of excess capacit;y;" as ocourred be,tween _~956 and 1962 in North Amerioa, ,the effects can hever;y; adver-se ,

Access to consuming markets

."~

primary ~etal at home.

18. Alj'major priva'te oompanies control in various ,:d'egrees the ma;rke,t for their primar!',metal, Because their fab;J;,ioating capaoities8:J:'e usuaL«

ly much gTl3ater th~n their p,rilllary <lngot c,apacity, these companies

restriot the volume' of business freely open to other ,Producers

'at

^prima'J:.y

aluminium.

19. Th~market rest;dG,tionsarenot only ,cr~i'-te;d ^by OWli'1rship of captive fabricating pJ:apts" a s Ls the C!'Eiepf the large"iTS produceJ;'s of prilllary

. .' _ '.' "'. . L ' . .

aluminium.' Others likeF;rench1

"clllr,ll1!l-ll

and Swiss pr oducer-s , also have built up traderslations with cus bomer-s tha tare diffieul t for competi tors to upaet , Prj,vai;<l, cr,\'de e.Lum.Lnd.um vp.r-od.uo'ez-e have been further restric.,t- ing opportuni ties;for ' competitors by purchasing some semi-fabricating. ^'C companies,or by entering alliances with them tc provide tech~lcal

ass,istance. The large companies furthermore can ,offer teohnical aids in production methods and help, in developing market demand that, small pri va te companies and small government enterprises cannot equal.

20~nevelopingcountries in Africa and el~ewhere thus find that even·

i f they co,Uldbuild their own go-ve'rnment aluminium smelter~; they 'W'6uld ha.ve>i$upe1;ii'tlt;.1al problem" of disP9:siUg of metal in export markets:';

rr "

they Wish to obtain aluminium sroel ters in advance O'fthe abi l

ity

of domestic markets to absorb the' 'output, they have t6make arrangements'·

E/CN.14/AS/II/2/j Page 24

with outside companies or' foreign governments who oan provide the teohnical assistanoe and the neoessary markets. This Was the basis of the smelter built in the Cameroun by two French companies who take almost all the metal for export, and the smelter now being built in Ghana by two US companies who will take most of the metal for export.

Ba~ite, alumina, and developing countries

21. The same solution also is necessary for African oountries wishing to obtain bauxite development or alumina plants, long before an integrated domestic industry will be needed, Ghana's bauxite production' is in

the hands of a British oompany. Guinea's alumina plant is owned by a consortium of foreign private 'companies, and the new bauxite mine of Sierra Leone is operated by a Swiss oompany. Guinea's bauxite pr~

duction. wall ..originally in the hands of a Canadian oontrolled Frenoh oompany. This was taken over by the Government of Guinea

in

1962 with teohnioal help from the Government of Hungary but with a substantial loss .of the bauxite market. Consequently, the Government of Guinea.

turned again to a foreign company to help develop the major bauxite deposits of the country, but this time on a basis of joint ownership

"~;~ ,

wt't'hthe Government.

,"..;.'-

22. Developir:;gccuntries in Africa~.elsewherehave made differep~

types of arrangements for the minipgand.export of their bauxite. Al-.

though the national benefi ts from produsjPEi the bauxa te for export are much. smaller than those from prod~oing al~andthe metal for e~ort,

these benefits have been very significant to some of the less developed cOlUltries who are major producers. This has been t.pe case particularly.

in th~ Caribbean area with Jamaica, SUrinam and British Guiana. Benefits have beenunimport.ant to small.bauxi teo produoers likf3Ghana.

23. Renefi ts result from modest amounts of emp Ioymerrt cr-ea ted but much more importantly from substantial financial contributions in royalties and income taxes. In some oountries" the concessions for bauxite mining have also been conditioned coptraotually or informally upon oommitments of oompanies immediately or later to establish alumina plants, as in Jamaica, British Guiana, Guinea, Surinam, and Australia. As was the

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