ALCOA, the company that retained a lobbyist for two years on the Lower Churchill project, is slashing another 350,000 tonnes from its production in light of declining global demand for aluminum.
That brings the total ALCOA reduction to 615,000 tonnes this year, or 15% of the company's total production capacity.
Rio Tinto is reconsidering an $11 billion project in Saudi Arabia and Vale is also cutting output.
Aluminum prices have plummeted by more than 40 per cent to around $1,995 a tonne on the London Metal Exchange since July as demand from industries as far afield as aerospace and soda cans has shrivelled up.
Inventories held in LME warehouses have ballooned to 1.55 million tonnes, equivalent to more than half the yearly output of Australia, a major supplier.
“Cuts, such as the one by Alcoa, and the Chinese stimulus package, could help the market, but it will take time to work off the massive inventory build-ups,” Investec Resources analyst Darren Heathcoate said.
All of this pretty much makes speculation about an aluminum smelter for Labrador seem pretty far fetched.
Well, far fetched to people who aren't wearing tin foil hats.
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