Thread by @TotherChris

UK aluminium, a brief backgrounder thread. More later in the year. Possibly.

This will... fuse... with a Titanium thread in the future :)

Less than a decade ago the British aluminium sector was in rude health, concerned about the future but with a firm base, a mature supply chain, high quality, precision and local customers.

There were three core plants:

- Lynemouth (178,000 tons p.a.)
- Anglesey (145,000 tons p.a.)
- Lochaber (43,000 tons p.a.)

The concerns expressed for the industry were largely energy costs. Aluminium production is extremely energy dependent on the energy/labour cost scale and sensitive to supply price changes.

On the flip side, the industry can offer a baseline load for power stations and grids of all kinds. Every industry likes continuous custom, even the energy sector, and are willing to offer deals for that custom.

Neither the Labour Government leading up to 2010 nor the Lib-Con coalition post 2010 were interested in a national energy policy supporting industry.

Instead, they were concerned mainly with consumer energy costs and environmental policy such as renewables. This was driven by attracting populist votes, EU renewables directives and international agreements such as the Paris Agreement.

In addition, EU state aid rules meant that Government takeover of power plants such as Wylfa - which supplied the Anglesey plant - would be classed as illegal state aid under EU competition rules...

...apparently the continent couldn't ship electricity from France to Anglesey as cheaply as a nuclear power station right next door to the actual Smelt. Go figure.

Anglesey and Lynemouth were becoming uncompetitive. Not because the plants were inefficient, the quality low, the precision lacking or the staff skilled - but purely because the National Grid wasn't allowed to supply cheaper 'leccy and nobody seemed to care.

Lochaber survived, just, arguably because they used abundant hydroelectric power in the Fort William area - EU rules and UK renewables taxes weren't as painful for this source of power to smelt the aluminium.

Fast forward to today. Lochaber is still producing 1/6 of what the UK used to produce, HOWEVER, there are several good news stories either in the works RIGHT NOW or arriving on the horizon.

The first is the quality of the Lochaber aluminium. It's top-notch. Engineers love it as they know it will behave exactly as their math says it should.

Secondly the hydroelectric power is still present and there's £2b being invested in wind power by ScottishPower in the area this year, part of a £6b renewable + battery (yup!) rollout over the next few years.

Thirdly, Lochaber has invested in new technology including Treatment of Aluminium in Crucible (TAC) on top of existing processes which delivers the quality on offer in speedy times.

Fourth...ly... is a wheel alloy plant opening up right alongside the smelt. The output of this plant alone switches the UK from a large importer of car alloys to a global exporter with a higher quality product at value.

Fifth is a car parts manufacturing plant, again opening up nearby to the smelt, due to complete in 2020 and supplying a number of other automotive manufacturers in the UK. Several of whom talk about withdrawing on one hand while investing heavily with the other. Again, go figure.

There's a growing aluminium sector in Lochaber that will see production climb above 45,000 tons again, this time with cheaper, renewable energy sources more resistent to energy price fluctuations and poorly-considered taxes.

The recently announced WTO tariffs for a no-deal Brexit support the industry: Poorer quality aluminium imports will be discouraged, the local production encouraged with the feedstock choice unaffected.

In the event the UK remains in the EU, the higher production quality, swathe of techniques available, the growing "aluminium community" of the area and "green credentials" also leaves the sector with major opportunities on the horizon. There are many HVM co's in need of Al now.

And if you're in the Lochaber region and thinking about a career, you can't go far wrong than consider an apprenticeship amongst spectacular scenery.

/FIN

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