09 JULY 2013Businessspectator.com.au
Aluminium sector urged to unite
Edited by : AL CIRCLE
1 min read
A consultant's report has called on aluminium producers, including BHP Billiton Ltd and Rio Tinto Ltd, to cut capacity in a bid to end the sector's prolonged stretch of limited profitability, according to The Australian Financial Review.
The report's co-author, Boston Consulting Group's global leader for metals and mining Alexander Koch, said there is a consensus within the aluminium sector that the oversupply issue must be addressed but that no individual company is willing to be the first to act.
“It's one of those situations where either capacity reduces at some point to be in tune with demand or you just prolong structural low profitability,” Mr Koch told the AFR.
“The scale of the problem is too daunting to be resolved by individual companies acting independently and in their own self-interest.
“It requires the collective action of the key industry players, including governments in critical markets, to align capacity rapidly and on a sufficient scale.”
Much of the oversupply issue is traced to China, which raised it annual smelting capacity from 11.2 million tonnes to 17.8 million tonnes between 2007 and 2011, according to the AFR.
The report's co-author, Boston Consulting Group's global leader for metals and mining Alexander Koch, said there is a consensus within the aluminium sector that the oversupply issue must be addressed but that no individual company is willing to be the first to act.
“It's one of those situations where either capacity reduces at some point to be in tune with demand or you just prolong structural low profitability,” Mr Koch told the AFR.
“The scale of the problem is too daunting to be resolved by individual companies acting independently and in their own self-interest.
“It requires the collective action of the key industry players, including governments in critical markets, to align capacity rapidly and on a sufficient scale.”
Much of the oversupply issue is traced to China, which raised it annual smelting capacity from 11.2 million tonnes to 17.8 million tonnes between 2007 and 2011, according to the AFR.
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