Insight
Alumina incentive price rises on regional shift
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Report summary
We now estimate that the incentive price at which investors would be willing to build new alumina capacity is US$400/t, US$40/t higher than our previous estimate, while the equivalent price for aluminium remains at US$ 2300/t.
Table of contents
- Executive summary
- Southeast Asia: new entrant to future alumina supply growth
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Operating costs are stickier than prices
- Smelter capital intensity outside of China, 1980-2015 (US$/t installed capacity)
- Ample future refinery capacity and temporary tightness in smelter supply
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Rationale, risks and IRR methodology
- Assumptions used to construct incentive prices
- We employ the following core assumptions:
Tables and charts
This report includes 8 images and tables including:
- New refinery capacity in Indonesia, India and Guinea to increase the incentive price
- China, India and to a lesser extent, Indonesia, will contribute a large portion of new smelter capacity
- Alumina costs - caustic soda, and bauxite outpace the alumina price, 2000-2016, Index 2000=100
- Aluminium costs - embedded costs have eaten into smelters' margins over the past 16 years
- Refinery capital intensity outside of China, 1980-2015 (US$/t installed capacity)
- Refinery incentive price 20% above the alumina average of the past ten years
- Aluminium price is well below the level needed to stimulate new smelter capacity
- Alumina incentive price rises on regional shift: Table 2
What's included
This report contains:
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