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.