“We expect the bullish trend in aluminium to continue in 2015 and probably beyond” Dr. Frank R. Feret – President, ICSOBA

Just a month before the upcoming ICSOBA Conference in Zhengzhou, China, AlCircle had the opportunity to speak to Dr. Frank R. Feret – President, ICSOBA; who is also an Independent Consultant for Feret Analytical Consulting, Quebec, Canada. He is an expert in providing insight into the characterization of materials for metallurgical process control from bauxite exploration to metal recycling and published some 50 scientific papers and contributed in three books in his field. He shared his view on the current trends in the bauxite, aluminium industry and also on the objectives and activities of ICSOBA.

AlCircle: Please tell us in brief about the main objectives and the functional areas of The International Committee for Study of Bauxite, Alumina & Aluminium (ICSOBA)

Dr. Feret: The International Committee for Study of Bauxite, Alumina & Aluminium (ICSOBA) is an independent, not-for-profit association that unites industry professionals representing major bauxite, alumina and aluminium producing companies, technology & equipment suppliers, universities, research institutes and consultants from around the world. The main objective of ICSOBA is to promote collaboration among its members that fosters exchange of ideas and results of work from different fields of research related to bauxite exploration and mining, and alumina and aluminium production all over the globe. Since 1963, 32 ICSOBA events - symposia, congresses and seminars have been organized in different parts of the world.

AlCircle: How long have you been associated with ICSOBA? Please share your experience in ICSOBA with our readers.

Dr. Feret: In my professional life with Alcan and later with Rio Tinto Alcan (RTA) I travelled to different countries on various assignments in plant laboratories or participated in a variety of international technical conferences. My first participation in the ICSOBA conference was in 2005 (Nagpur, India). I joined as one of the board of directors during the ICSOBA symposium on Bauxite Residue in Goa, India in 2011. In early 2012, I became the 11th president in the ICSOBA history. With great privilege comes great responsibility and the least we can do is to give back by supporting the work of organizations such as ICSOBA so that future generations can benefit. We are all volunteers here and the satisfaction of associating with a 50-year old organization and interacting with so many high calibre individuals is immeasurable.

AlCircle: Coming back to our industry sector; what is your say on the present bullish trend in aluminium industry? Is it going to continue in 2015?

Dr. Feret: The industry seems to be in a transition period. The major players are either trying to improve the bottom line or discontinuing loss making units. They are not investing much on the primary side (bauxite, alumina) avoiding major new projects. The situation in China is also puzzling as they no longer have access to bauxite from Indonesia. Although Chinese manufacturers have accumulated certain reserves but a significant drop in the amount of imported bauxite is not sustainable for long and must be addressed.

On the other hand the existing automotive situation looks positive as all the major automakers strive to put up the next generation of automobiles with high aluminum content to keep the weight in check and cope up with the new carbon emission rules. Already aluminum industry is entering the era of deficit as a result of continuous capacity cuts by major aluminium producers. Consequently, aluminum prices on the London Metal Exchange are up by more than 11% since the summer 2013 to above $2,050 per ton. We expect this trend to continue in 2015 and probably beyond.

AlCircle: What is your take on the restrictions imposed upon bauxite mining around the world? How do you think, is it affecting the growth of mining and the aluminium industry?

Dr. Feret: All the bauxite exporting countries are affected by increasing restrictions against mining. In several countries like Indonesia, Guyana and Jamaica, bauxite industry is fighting for survival. One of the major reasons is that the price of alumina has grown twice as fast as that of bauxite in the last 20 years. Bauxite producers are generally bound by long term contracts and in many cases cannot expect the price of their commodity to increase significantly. The second reason can be illustrated by the example of India where mining is vigorously opposed on ground of tribal sentiments and environmental concerns. The third reason is that bauxite producing countries would like to see expansion of their own refining/smelting facilities for employment growth and social cause. For various metal producers this would mean buying alumina rather than bauxite and giving up on local alumina refineries. Savings on transportation cost are also worth mentioning. It remains to be seen, however, whether alumina buyers will continue procuring raw materials from politically volatile nations.

Construction of a new alumina refinery takes a long time. One cannot expect a shift in increased trading of alumina anytime soon. Therefore, new sources of bauxite must be found or production in active mines must increase in order to supply to existing refineries. With generally decreasing bauxite quality more sampling and more stringent methodology for estimation of bauxite quality should be applied. The industry should know better the commercial value of its principal commodity and use mineralogical rather than elemental composition for its estimation. There is enough bauxite around the world for years to come and one need to worry about how to get it rather than where.

AlCircle: Which industrial sector do you think has the potential to boost the demand for aluminium globally?

Dr. Feret: As I already mentioned, the automotive industry will continue to increase consumption of aluminum. Experimental trucks, busses and trains with high aluminum content are already entering the market. Buyers need now to be convinced that a higher upfront purchase price for the new technology will pay off in the long run. Two major issues remain to be solved. One is product durability and the other is product safety. Manufacturers must prove that lighter products predominantly made of aluminum will perform to expected standards.

Yet another sector that will see increase in global consumption of aluminum is the building industry. Packaging industry has offered growth in aluminum consumption for years and will continue to do so.

AlCircle: What is your view on the role played by China in the present global aluminium industry?

Dr. Feret: Since the 1950’s, about 35 alumina refineries and 60 aluminium smelters have been built in China. Presently China produces 50% of the world’s alumina and aluminium. Not only does China produce more and more metal on an annual basis but its internal aluminum consumption continues to grow steadily. The capacity of primary aluminum production has increased from 18,000 kt in 2008 to 30,000 kt in 2013. A number of smelters have been migrated from the middle and the east of the country to the north and northwest of China due to energy price differences.

China’s aluminum industry is highly dependent upon external resources. For example, between 2007 and 2013 the total external dependency rate on bauxite and alumina was almost 50%. In 2012 alone the alumina production capacity and output has increased by more than 10%. Following the export ban on Indonesian bauxite, the objective is to increase alumina production capacity from fly ash to 3600 kt by 2015. However, existing Bayer plants cannot be converted from bauxite of elevated tri-hydrate content to locally available diasporic bauxite. Therefore China will have no choice but to continue to import from external sources.

Despite being the largest producer of alumina and aluminum in the world, Chinese aluminum industry has realized only 930M RMB profit in 2012. The industry lost 350M RMB in 2013. Already new directives prohibit operation of smelters with less than 160 kA as the bar is now set at 400 kA for construction of new smelters. As almost half of all activities in the aluminum industry are in China, further development of alumina and aluminum sector in China is important to the world.

AlCircle: During the present commercial situation what is the relevance of an organization like ICSOBA for the aluminium industry?

Dr. Feret: We are aware of the difficult commercial situation, travel bans and all sorts of restrictions imposed by leading organizations, which are not helpful to stage a major international conference. Those ICSOBA members who can travel across the globe to meet once a year are fuelled by a common professional passion and desire to learn from one another. Our members are active in different fields and specializations, and they work within different social and economic frameworks, but there is one thing they have in common: they share the same conviction on the strategic role of aluminum in the present stage of world development. There is no doubt that ICSOBA is an industry ally and with time, ICSOBA will expand and will reach more and more aluminum industry players.

AlCircle: Tell us something about the upcoming ICSOBA conference in Zhengzhou, China. Is there any particular reason behind choosing the venue?

Dr. Feret: The 32nd International Conference & Exhibition of ICSOBA will be held in Henan province of China in the Zhengzhou Research Institute of CHALCO from 12 to 15 October. The event is organized in cooperation with Aluminum Corporation of China (CHINALCO). Main objectives of the Conference are to:

• review the status of bauxite, alumina and aluminium industries in the world with emphasis on China
• discuss promising research developments aimed at production, productivity and cost improvements;
• highlight proposed Greenfield and Brownfield activities in the aluminium industry
• discuss developments in the field of environment and safety
• update market aspects of bauxite, alumina and aluminium and their products

The ICSOBA choose our venues strategically to provide our members with unique exposure to different facets of our industry across the world. For both local participants and visitors there is a benefit resulting from exchange of information, ideas and experience. Given the present importance of China for the global aluminium industry, ICSOBA has decided to hold its 2014 Conference & Exhibition in China.

Disclaimer: “The information presented herein is neither intended nor implied to be a substitute for professional advice. The views and opinions shared in the interview section of www.alcircle.com are unique to the interviewees and do not necessarily reflect the viewpoint of www.alcircle.com.”