Speaking at the CRU's 11th World Aluminum Conference in Montreal, Canada today, Alcan Inc.'s President and Chief Executive Officer, Dick Evans, highlighted that the global aluminum industry must maintain its focus on the fundamentals to avoid making poor decisions in light of the current commodities boom.In his address to delegates and experts from the global aluminum industry, Evans said, "The near term aluminum industry outlook has changed dramatically for the better over the past year. Regardless of whether this upswing is cyclical or structural, we must look beyond the present hype in the marketplace and acknowledge that the key to success remains the same as before: a successful long-term strategy driven by
low-cost production, advanced technology, ownership of quality assets, and a sustainable approach to business." In assessing the current strength in aluminum prices, Evans discussed four key factors he believes will determine the future direction of prices:
- The purchasing power of the U.S. dollar;
- High energy prices;
- Alumina prices; and
- Economic growth, particularly in China. The combination of these factors, Evans said, are responsible for the current strong prices. The future shortfall in the global aluminum supply/demand balance, will be primarily filled by regions such as China, the Middle East, and Russia, followed closely by India, Brazil and Africa, he believes. "All six are already working with industry leaders, such as Alcan, to bring them capital, technology, best operating practices, management capability and sustainable business models," said Evans. As an example of Alcan's approach to growth, Mr. Evans stated that the company has targeted for more than 50% of its alumina and smelting production to be in the lowest quartile of the world cost curve. Alcan also has a strategy to self generate more than half its electricity needs, which in turn helps in the reduction of GHG emissions. Alcan is also continuing to invest in leading alumina and smelting technology, and to own and
participate in the industry's most modern and efficient installations wherever these opportunities exist in the world. "Whether aluminum is at US$1,500 or US$3,000/ton, our industry has to remember that the basic equation of energy plus resources plus technology equals success has not changed. For Alcan, this means pursuing a strategy of sustainable long-term growth," concluded Mr. Evans.