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.

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    Alumina incentive price rises on regional shift

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  • 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 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


  • Refinery capital intensity outside of China, 1980-2015 (US$/t installed capacity)
  • Alumina incentive price rises on regional shift: Table 2

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