Canada’s aluminum industry is not worried about U.S. tariffs continuing into the new year. While Canadian domestic producers will absorb the loss of U.S. business and find other customers, the U.S. will find it nearly impossible to replace its cheapest supplier, says Jean Simard, president and chief executive officer at Aluminum Association of Canada. “We wish them good luck,” says Simard. The U.S. depends on Canada for 75 per cent of its imported primary aluminum, covering 60 per cent of its yearly usage, the association says. With 50 per cent tariffs in place, he says American industries, not Canadian smelters, will bear the brunt of the financial pain, as U.S. manufacturers face soaring production costs. “They’re pricing themselves out of export markets because, basically, they’re paying US$1500 to US$2,000 a tonne more for the metal than their competitors in Europe are paying for,” says Simard. Now that Canada has announced 50 per cent counter-tariffs on American goods to retaliate dollar for dollar, he doesn’t think the new tariffs on American aluminum will hurt Canada. “We’ve been there before,” says Simard. “The government has the means to be able to support any industry, any company that is bearing some of the impact of these tariffs on imports.” Canada will always have other markets The U.S. produces 675,000 tonnes of aluminum while it consumes four billion tonnes, he says. “They need the metal.” A U.S. Geological Survey report details the country’s shrinking metal-making infrastructure, showing that only two of the four remaining smelters are running at full capacity while the others are temporarily shut down. Even if proposed aluminum projects move ahead, by the end of the decade, he estimates domestic production would only be able to increase by one million tonnes, which is the expected increase in demand for that period of time. So while Canada’s aluminum has markets in the U.S. and Europe, it can arbitrage its way toward Europe and other markets, he says. “We will never be in dire need of finding markets. It’s the markets that are in dire need of finding metal,” says Simard. Aluminum production needs energy The U.S. simply does not have enough domestic production or available power to place the amount of Canadian aluminum its manufactures rely on, says Simard. “It’s all about energy,” he says. “They basically don’t really have the energy to back their destiny that they’ve set for themselves.” Canada says it produces about 3.3 million tonnes of aluminum and ships roughly 2.7 million tonnes to the U.S. Producing that amount of metal requires about 40 million megawatt-hours of energy, the equivalent of five Hoover Dams or the electricity consumption of 466 data centres, says Simard. Canada relies on abundant, clean hydroelectric energy to power its smelters. Nine out of 10 are in Quebec and use the massive river systems and provincial backed Hydro-Québec power contracts to secure low-cost renewable electricity. Creating jobs in the U.S. Simard says Canadian aluminum also creates jobs in the U.S. “For each job in Canada, we supply 13 jobs with metal in the U.S,” says Simard, while criticizing the country’s manufacturing sector. On the other hand, the U.S. Aluminum Association’s labour tracking shows that primary smelting employment has “declined significantly” over the last decade with heavy job losses from the dying raw-smelting plants. Meanwhile, Simard says Canadian aluminum producers have so far avoided the worst consequences of the trade fight. “We have not curtailed any capacity. We have not laid off anyone, and we don’t have any intention to do so,” said Simard. He says Canadian producers initially absorbed some losses when the U.S. tariff on aluminum rose to 50 per cent last year, but the market eventually adjusted and U.S. buyers began bearing the cost. He says a $7.5 billion package supports businesses and workers affected by the latest U.S. measures, targeting heavily impacted processing and transformation industries. “They’re priced out of the market with a 50 per cent tariff, and when they turn around to sell domestically, they’re stuck with competition coming from Asia, from China that undercuts the prices. So they need help.”
