The Canadian Institute of Mining, Metallurgy and Petroleum’s economics committee in Toronto heard an enlightening talk by Robert Adams, who recently returned from the Commonwealth of Independent States (CIS).
Adams, president of Resource Strategies Inc. of Philadelphia, visited the CIS to gain an insight into the competitive position of the aluminum industry there.
The CIS has four of the world’s largest aluminum smelters. These plants and 10 others produced an estimated 3.1 million tons of primary metal in 1991, representing the second largest national output and 16% of the world’s total production. Only the U.S., at 4.1 million tons, is a larger producer. Canada is the third largest at 1.8 million tons in 1991.
While what Adams had to say mainly concerned aluminum, he had some pertinent observations to make with respect to nickel. The response of the two metals to the current political instability and rupture of the economic system is identical.
Prior to the breakup of the Soviet Union, Adams estimates about a third of total aluminum production was consumed by the military. (It was no surprise to Adams that there were no available statistical data identifying military usage. His estimate is based on relative consumptions elsewhere in the world.) Now that military consumption in the CIS is minimal, and with no consumer market to soak up the metal, most is being diverted to Western markets where it can be readily converted into hard currencies.
If the present production status continues, Adams estimates 1.1-1.2 million tons of aluminum will be exported to the West in 1992.
Figures for nickel exports were 90,000 tons in 1990 and Adams estimates 110,000-120,000 tons in 1992, rising to 130,000-140,000 tons later. While this scenario applies specifically to aluminum and nickel, the same market distorting factors are affecting uranium and steel.
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