Near-Term Decline Expected in Australian Alumina Production
Australia is a substantial alumina producer, accounting for about one-quarter of total world production each year, according to a recent report from IBISWorld. Alumina production is expected to total 20.9 million tons in 2013-2014, compared with 19.6 million tons in 2008-2009.
Alumina output is expected to decline in 2013-2014, as Rio Tinto’s Gove refinery reduces output and domestic demand from aluminum smelters falls. Alumina output surged in 2012-2013 as the full-year effect of large expansions at the Worsley, Wash., and Yarwun, Queensland, refineries drove volume growth. Although some alumina is smelted into aluminum locally, most output is exported. These exports, amounting to an expected 15.4 million tons in 2013-2014, are expected to generate revenue of $5.2 billion for the year. Imports of alumina are negligible by comparison. The size of the local market for alumina, estimated at $1.9 billion in 2013-2014, is dwarfed by the value of exports.
The alumina production industry is expected to generate revenue of $7.1 billion in 2013-2014, down from $9.1 billion in 2008-2009. This represents a contraction of an annualized 4.9% for the five years. “Lower alumina prices (in Australian dollars and after adjustment for inflation) are responsible for the fall,” said Alen Allday, industry analyst. “These lower prices reflect the impact of a stronger Australian dollar over most of the five-year period.”
Alumina prices are typically set in U.S. dollars, and the appreciation of the Australian dollar has had a negative effect on prices in local currency. IBISWorld expects revenue to decline by 3.8% in 2013-2014 due to lower volumes and slight pricing growth. Industry revenue is expected to make small overall gains during the five years through 2018-2019 due to increased output and higher prices.
“Despite the planned closure of Rio Tinto’s Gove refinery in 2014-2015, industry output is expected to increase from 2015-2016 on higher export levels,” Allday said.
For more information, visit www.ibisworld.com.