Wednesday, October 1, 2008

Power, Power, Power: Alcoa is closing a high-cost Texas smelter

Power costs, competitive issues cited for shutdown

Citing power-supply problems, lower sales prices and decreasing demand for aluminum, Alcoa will continue the staged shutdown of its Rockdale, Texas, smelter. A portion of the ingot-making smelter was shut in June and more will shut in December. Alcoa says the move is an effort to reduce production and power costs to remain competitive against bigger rivals Rio Tinto and United Co. Rusal....
...Aluminum plants are heavy users of power, which accounts for nearly 30% of production costs. To mitigate expenses, aluminum companies have been moving operations from high-cost power countries such as the U.S. to relatively cheaper locations like Canada, Iceland, the Middle East and Russia.
And that boys and girls is similar to what the EU is experiencing under cap-and-trade where it is called 'carbon leakage' (not to be confused another leakage that I've seen mentioned as a 'side-effect' of some drugs, technically known as steatorrhea and the butt of low comedy)