Addressing the Aluminium Federation’s annual lunch at the House of Lords, its President, Simon MacVicker, managing director of Bridgnorth Aluminium (pictured), welcomed the development of the UK’s first Industrial Strategy for Metals, but highlighted the severe decline in the country’s aluminium capacity in recent years.
“The UK has lost two of our three primary smelters, representing or 87% of capacity. We have lost three of the five hot rolling plants and all three foil plants. We have lost three major extrusion plants, and 50% of the secondary aluminium capacity. We have lost important mill builders and other technology suppliers”, he said.
This contrasted starkly with Germany which, in all aluminium sectors except secondary smelting, had managed to keep or grow its industrial capacity. “Germany supports its industry base, while the UK has been complacent.
Mr MacVicker also stressed the importance of competitive energy pricing for UK industry, which was struggling with electricity prices some 40% higher than European competitors. The UK Government had made a partial attempt to allow exemptions from the indirect costs of the EU Emissions Trading Scheme, but chose not to offer the full sector wide support, as given in Germany.
He also noted how only last week Germany had reversed its policy on de-commissioning coal fired energy capacity because of the adverse effects that would create for its industrial sector.
Further afield, Mr MacVicker highlighted the huge aluminium capacity expansion in China over the past decade. The metals industry in China was subject to state intervention, distorting domestic markets and adversely affecting world markets at all levels in the aluminium industry. China should therefore not awarded Market Economy Status in December.
The level of scrap aluminium exports to China was also an issue the government and the EU needed to address. “We have long argued for scrap to be considered a strategic resource by our governments, just as the Chinese do. They are right, because it is stored energy, and we should not be allowing its export in such great quantities.”
Despite the challenges it faces, the UK aluminium industry was continuing to invest - most notably the recycling facilities at Novelis and cast house, cold rolling and litho finishing capacity at Bridgnorth Aluminium. However, such success stories were the exception to the rule.
“So far our industry is choosing to invest mainly in the USA, Germany and China. Our challenge should be not only to hold on to our current capacity, but to create the appropriate conditions for new investment.
“Our sector continues to provide solutions to modern society, whether it is a zero emissions building such as the new transport interchange in Rochdale, or the lightweight Jaguar XE, or Morrisons selling wine with a new even more sustainable closure, every year we have an impressive list of achievements.”
The future for the global aluminium industry was bright, suggested Mr MacVicker. His main concern was how much of it would be located in the UK.
“The huge potential for aluminium to cut weight out of vehicles and thus provide an environmental solution is leading to exciting new demand. The question that should exercise this group is how much of the capital investment to support these changes is being placed in the UK?
“Just as world governments are creating favourable conditions for sustainable innovations in transport, they could do the same in building and construction, where aluminium has very strong offerings. The UK has a particular opportunity, because we are short of housing, and our current housing stock performs less well environmentally than in other countries such as Germany and Switzerland, so we are wasting huge amounts of energy.”
Also addressing the meeting were Jon Bolton, Director of Tata Steel UK, who chairs the industry group developing the Metals Industrial Strategy and Stuart Edwards of the Department for Business, innovation and Skills.
You can read more about the event and the speeches here