Metals: Pouring Their Own

Even at the painful cost of $200 million a year to its balance of payments, Britain has long accepted its role as one of the world’s foremost aluminum importers. The high price of the electric power required for aluminum smelting has kept British manufacturing down to an insignificant annual 39,000 short tons of ingots, less than 10% of the country’s needs.

Soon this is going to change. After years of dawdling, the Labor government finally announced its plan to help set up a domestic aluminum industry. British Aluminium Co. .(partly owned by Reynolds Metals of the U.S.) and the British mining concern, Rio Tinto-Zinc Corp., received the go-ahead to build two smelting plants. They are expected to produce an annual 224,000 tons of ingots by 1971 and save $100 million a year on imports.

Cheap Power. Key to the state-sponsored scheme is a special deal to pro vide the plants with cheap power. Each company will build its own smelter and invest jointly with the government in a power plant. The government will contribute 30-year loans totaling $149 million to cover the investment in the power stations and will charge the companies special low rates for the electricity they use.

Rio Tinto will build its 112,000-ton smelter on the Welsh island of Anglesey at Holyhead. As the “buying-in” price for a cheap power deal, it will in vest $79 million in the new Dungeness nuclear-power station in Kent. British Aluminium got the coveted site at Invergordon in the Highlands, the last undeveloped deep-water port in the United Kingdom. Its 112,000-ton smelter there will be fueled at the cheap rate in return for a $70 million investment.

Six years from now the new plants, plus the increased smelting capacity of Alcan Aluminium Ltd., should be able to put 348,000 short tons of ingots on the market annually, but some analysts are predicting an aluminum glut before then. Sir Val Duncan, chairman of Rio Tinto, disagrees. “If you look at it globally, that must be nonsense,” he says.

“The world increase in aluminum demand is going up at the rate of 7% a year. That means some 360,000 tons of new capacity of aluminum must be found every year.”

Nevertheless, marketing patterns are bound to change as British producers gradually meet most of the domestic needs. Industry leaders are looking forward to shedding their dependence on foreign producers. The biggest potential loser: Norway, which now sells a third of its aluminum ingot exports in Britain, duty-free.