Major regions that produce aluminum
In this part of the series, we’ll look at the major regions that produce aluminum. It’s important to understand the dynamics of these economies. Global aluminum giants—like Rio Tinto (RIO), BHP Billiton (BHP), and Alcoa (AA)—are impacted by the dynamics of these economies.
China is the largest producer
The above chart shows the key regions that produced aluminum in 2013. As you can see, China is the biggest producer. It accounts for almost half of global aluminum production. Please be aware that this includes reported and unreported production in China.
North America accounts for ~10% of global aluminum production. Europe accounts for ~15% of global aluminum production.
Countries in the Middle East
The Gulf Cooperation Council (or GCC) accounts for ~8% of global aluminum production. The GCC is an economic alliance. It includes six countries in the Middle East. Interestingly, these countries aren’t big aluminum consumers. They export most of their aluminum production.
The GCC countries have access to cheap crude oil. Aluminum production is very energy intensive. Aluminum plants are usually located where they have access to cheap energy sources. AA opened its new plant in Saudi Arabia. This facility is the smelter with the lowest cost globally.
Century Aluminum (CENX) has production plants in Iceland. This provides CENX with access to Iceland’s cheap hydroelectric power. Currently, CENX is among the top ten holdings of the SPDR S&P Metals and Mining ETF (XME).
Investors should also analyze the key regions that consume aluminum. This will give investors an accurate view of the global aluminum industry. In the next part of this series, we’ll discuss the major countries that consume aluminum.