Growing market for smelter grade alumina

The market for smelter grade alumina is primarily controlled by integrated aluminium companies. In 2008, worldwide alumina refining capacity totalled approximately 90 million metric tons per year including non-metallurgical aluminiums. It is estimated that approximately 80% of alumina production from alumina refineries is transferred to, and consumed by, smelters owned by the same entities that own the applicable alumina refineries. The "third party" market for alumina amounts to only a third of total production although that percentage will rise as new smelter companies enter the market. Alcoa is probably the world's largest supplier of alumina to third parties but Chalco, BHP Billiton and Rio Tinto Alcan are also major third party market sellers. Glencore was a major third party seller and is expected to continue trading alumina but its production assets have now been transferred into UCR, which has become a small net supplier as a result.

The primary buyers of alumina are independent smelters and integrated aluminium companies that have smelting capacity that requires alumina in excess of alumina produced by their own alumina refineries.

There has been a recent increase in the number and size of independent smelters in China and the Middle East. Despite this, Chalco has used the opportunity of recent low income streams for smelters in China to acquire a number of independent companies and to begin rationalizing the industry in that country.