Consumption of semi-finished aluminium, according to calculations made by renowned aluminium consultant James King, may rise between 1995 and 2015 at the rate of 1.5-2.5 per cent per annum in major industrial countries the USA, Japan and larger European countries and by 3.5 per cent in developing countries.

In the Eastern countries, growth in consumption is expected to be high, if it recovers from the low levels in the former USSR and Eastern Europe. It may remain, however, stagnant in a few other countries. Consumption growth is expected to be substantial in China. There it may more than double the 1995-level by 2015. Assuming,therefore, an average annual growth rate of 2.3 per cent, primary aluminium consumption is expected to reach 31.8 million tonnes in 2015. In shorter term, consumption is expected to increase by 2.1 per cent in 1999 and 2.6 per cent in 2000.

Though the long-term consumption growth rate of 2.3 per cent per annum might look modest, in absolute terms it can be big enough to upset the global demand-supply balance, unless fresh capacities are rapidly built up. This is evident from the fact that the world consumption of primary metal which was of the order of 20.7 million tonnes in 1996 may rise to 31.8 million tonnes in 2015 even if the growth rate is 2.3 per cent.

This might mean a net rise of 11 million tonnes in annual consumption by 2015. This will be substantially more than the growth achieved in the last 20 years.

The world capacity to produce primary aluminium at the end of 1996 stood, on the other hand, at 23.6 million tonnes, spread over 195 plants. Of them, 106 were in western countries withaggregate capacity of 17.2 million tonnes and 69 in eastern countries with total capacity of 6.4 million tonnes. Over the past 20 years (1975-1995) net addition to the primary smelter capacity has been of the order of 7.7 million tonnes. This was achieved through addition of 5.8 million tonnes through establishment of 25 smelters and expansion of 30 so as to add 4.3 million tonnes. On the other hand, 57 units were closed down taking away 3.9 million tonnes of the installed capacity. A few other plants were also able to increase their capacity by 1.4 million tonnes. Thus the net expansion of capacity during the period was of the order of 7.7 million tonnes. The average capacity of the new smelter was 234,000 tonnes, while that in the case of closed units was around 69,000 tonnes.

The global capacity for primary aluminium production is expected to fall short of requirement after 2000. This gap is expected to rise to 2.2 million tonnes per annum by 2005; to 5.24 million tonnes per annum by 2010 and to 9.64million tonnes in 2015. If this gap is to be bridged, additional capacity of 11 million tonnes of primary metal will have to be created during the period.

It is calculated that the requisite additional capacity can be brought about by setting up at least 20 new smelters - about one every year -- to add 5.9 million tonnes to the existing capacity and by expanding 38 plants to add another 5.2 million tonnes to the capacity during the period.

However 19 old and uneconomic plants might close down during the period taking away 0.9 million tonnes, while other changes might add some 1.9 million tonnes. Theoretically additional capacity of 12 million tonnes can thus be created during the period. Actually, however, it may not be easy to do so, looking to the fact that the rate of fresh investment in this industry has considerably slowed down. While brown-field expansions may be economically viable, it is doubtful whether green-field projects can be economical even at the present price levels which have gone upsubstantially over the past few months.

This is because the capital costs per tonne of new capacity has risen substantially. Unless prices move to more attractive levels fresh investments in green-field smelters may remain unattractive, leading to global shortage of primary aluminium.