The aluminum sector isn't moving to the U.S. despite tariffs — due to one key reason
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14 replies
Tl;dr
Power costs
Good thing we're investing in cost-efficient renewable energies that pay for themselves after like two years, right?
Yeah, instead of focusing on projects that just pipe foreign fossil fuels to foreign refineries under our nations largest source of freshwater. That would have be been a silly way to claim energy independence.
Which is how a country like Iceland is able to make more than the US despite having a total population of 400k people: They have tons of access to renewable energy through geothermal vents.
Norway makes around twice as much as the US with their 5.5m people, again because of renewables.
Saved you a click:
The primary barrier remains the lack of access to competitively priced, long-term power, according to the industry.
“Energy costs are a significant factor in the overall production cost of a smelter,” said Ami Shivkar, principal analyst of aluminum markets at analytics firm Wood Mackenzie. “High energy costs plague the US aluminium industry, forcing cutbacks and closures.”
“Canadian, Norwegian, and Middle Eastern aluminium smelters typically secure long-term energy contracts or operate captive power generation facilities. US smelter capacity, however, largely relies on short-term power contracts, placing it at a disadvantage,” Shivkar added, noting that energy costs for U.S. aluminum smelters were about $550 per tonne compared to $290 per tonne for Canadian smelters.
That Canadian and Norwegian aluminum is probably significantly greener than American aluminum too because they have so much hydropower.
This is why you lay the groundwork for cheap, renewable energy networks for consumers and industries to have access to before holding up a poster announcing seemingly random extreme tariff amounts.
Oh, and the chaotic on/off and exempt/non-exempt uncertainty is almost certainly part of the reason as well. And that's assuming the next administration doesn't reverse or drastically alter this terrible trade policy...
This is why essential services and goods are nationalized.
... and then out$ourced!
Yeah that's no good. That's a slick way to pay workers less.
Time to build more rocket fuel power plants.
With aluminum smelting its not just heat needed like iron/steel smelting, but electricity needed to employ Lorentz forces to separate the aluminum from everything else.
Power costs.