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This isn’t quite and wholly how it works, no

The result is the same, the mechanism differs:

Canned drinks, smartphones and cars could cost more after the energy crisis sent the price of aluminium soaring to a 13-year high.

Industry figures have warned that costs faced by aluminium producers are rising so rapidly that they have little choice but to pass them on to companies further down the supply chain.

It means a host of goods – including everything from cans to tools, electronic gadgets and vehicles – become more expensive to make.

Making aluminium is particularly energy-intensive, leading some in the industry to dub it “solid electricity”.

True that the costs of making Al are largely the electricity costs of treating Al2O3. Some – a slightly old number but indicative – $900 per tonne Al perhaps.

However, few primary aluminium makers will be seeing a significant rise in their prices. Simply because that’s not how you set up an Al plant. First, you go find your cheap energy. Iceland’s geothermal maybe, Siberian hydro, Welsh nuclear (used to be, on Anglesey). Then you sign up for the long term and build your plant.

Your ‘leccie price is then fixed.

However, when the ‘leccie price soars the alternative uses of that power become more valuable. To the point that perhaps you should stop making Al and just sell the ‘leccie instead. This does indeed happen, Pacific NW Al makers did this a few years back. Better to sell cheap hydro power into the grid than mess around with actually doin’ stuff.

It’s not that costs rise. It’s that the opportunity costs of making Al do. Same end result of course but different mechanism.

Note that prices of scrap Al also rise at the same time. Folks don’t face the same rising costs to collect that, nor to process it into secondary alloys. But the price moves up all the same – opportunity costs again, not actual production costs.

9 thoughts on “This isn’t quite and wholly how it works, no”

  1. Formula 1 constructors stopped using aluminium/aluminum over thirty years ago. Sailplane makers use only carbon fibre composite. A good chunk of the F-35 is CFC. Why not Boiinng/Airbus et al? If higher electricity prices accelerate graduation to the new technology, good.

  2. Why not Boiinng/Airbus et al?

    I thought the main selling point of the 787 was that it uses lightweight composites so it uses less fuel compared to a similar airframe constructed from aluminium.

  3. Airbus use significant amounts of CFRP in the A350.

    You’re not going to move away from ally totally in aircraft manufacture though. Ally is better than CFRP in places, depending on the load type it’s subjected to.

  4. If you want a neat way to store cheap electricity buy aluminium cooking foil. We have a lifetime’s supply bought when it seemed to me that Northern Rock might be the harbinger of a financial/economic collapse that would bugger up worldwide supply chains.

    Maybe we will prove right in the long term but certainly we were years too early. Our bog roll reserves are about the same vintage. I can announce that bog roll keeps very well – rather better than baked beans, in fact.

  5. Some – a slightly old number but indicative – $900 per tonne Al perhaps.

    RTA claims a range of 12.6 to 13.4 MWh per tonne for their current “AP” line of Aluminum pots. Depending on where you are, $900 is in the ballpark.

  6. “Canned drinks, smartphones and cars could cost more after the energy crisis sent the price of aluminium soaring to a 13-year high.”
    Smartphones? FFS! Who worked that one out! Shouldn’t think there’s more than 3 or 4 cans worth of Al in even the most Al’y smartphone. Softdrinks are currently on sale at our Lidl at 35 cents the can. And that includes the drink. Smartphones aren’t all plastic start at what? 300? That’s going to make a lot of difference, isn’t it?
    Scribblers! One brain between the lot of them.

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