Home > Economics - General, Environment > Peak aluminium?

Peak aluminium?

November 30th, 2013

The announcement that Rio Tinto is to close its alumina refinery at Gove struck me for a number of reasons, starting with the fact that members of my family are affected by it. First up it’s worth noticing what’s mentioned (the high dollar and low aluminium price, which flows through to bauxite and alumina) and what isn’t (the carbon tax and legislation for its removal). Having claimed that he was going to save industries like alumina and aluminium smelting from the carbon tax “wrecking ball”, Abbott is now shown up, once again, as a fraud[1].

In the short run, the obvious policy implication is that the RBA needs to be firmer in pushing the dollar down. It was, I think, a mistake to hose down talk of direct intervention, as was done recently. Given our declining terms of trade, we should be closer to $US0.80 than $US0.90 now, and heading down further.

The bigger question of interest, though, is the future of aluminium. The big story of the past 10-20 years has been the massive growth of production in China, driven by cheap coal-fired power and lots of subsidies. That’s driven prices down to historically low levels (inflation-adjusted, probably record lows). Production in Australia is now clearly uneconomic, but even the Chinese are losing billions.

Declining prices have driven steady growth in demand for aluminium. Since the supply of recycled aluminium is dependent on past production, there has been a multiplied effect on demand for primary aluminium, which is the big driver of greenhouse gas production in this industry.

The general assumption (as with most trends) has been that these trends will continue indefinitely. But it’s clear that prices have to rise just to cover costs, and will rise further as China starts to price the local and carbon costs of coal-fired electricity. Moreover, in technological terms, aluminium is definitely a 20th century commodity. Its inherent properties of lightness and strength gave it great advantages, but it is now being displaced in advanced uses by carbon fibre and in some basic uses by lightweight steels.

So, it seems to me quite plausible that aluminium demand could stabilise over the next decade or two, with the result that most demand can be met by recycling rather than energy-intensive production of primary aluminium from bauxite (via alumina).

Note: I topic-banned regular commenter Hermit from talking about aluminium smelters, as it become an idee fixe. The ban is lifted for this post.

fn1. Has any new PM ever been shown up so comprehensively in such a short time? Not in my memory, which goes back to Harold Holt, and includes some shockers.

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  1. Hermit
    November 30th, 2013 at 15:01 | #1

    Thanks for the invite. The Gove plant converts bauxite into alumina the stuff that is mixed elsewhere (places with cheap power) with a molten salt flux to electrolytically produce aluminium at the cathode. Each tonne of aluminium ingot consumes 15 Mwh of electricity which in turn creates about 15 tonnes of CO2 if powered by subcritical coal. The ‘red mud’ after getting alumina (as well as silica and clay) is said to re-absorb some CO2. That CO2 comes from fuel oil used in heating the mix at Gove or making the caustic soda input someplace else. The alumina is then shipped to the smelter.

    I’m not sure of the economics of transporting raw bauxite to China as that is unnecessary tonnage (50%?) and ship fuel. Australia is down from 6 electrolytic smelters to 5 with the closure of Kurri Kurri NSW which helped our emissions somewhat. The Brits seem to think they can get their aluminium recycling rate up to 80% but I think ours is a lot less. Adelaide’s can deposit scheme is yet to go Australia wide. As many point out (eg Stiglitz) we really should slap a carbon tariff on metals like aluminium bought from China. Assuming coal power that would be 15 X $24.15 = $362 per tonne in round figures on top of $1,750 FOB, a historically low price. Call it 20%. The carbon tariff would be in lieu of carbon tax exemption which in 2012 for smelters was 94.5%, perhaps a tad less in 2013.

    It’s bizarre if we buy aluminium made from our bauxite or alumina as the ore and our thermal coal as the energy source. Supposedly the most efficient smelters are now in the Middle East using gas fired electricity. It was alleged that our smelters paid as little as 2-4c per kwh a virtual subsidy worth over $130,000 per employee. There’s no way a low carbon mix of new nuclear, old hydro, wind and solar could get near that price. We must simply pay more for aluminium. Drink can recycling may be a hassle but it’s something we should do.

  2. iain
    November 30th, 2013 at 15:22 | #2

    There is no need for aluminium. The whole industry will shut down in natural course.

  3. Brett
    November 30th, 2013 at 15:33 | #3

    The Chinese are doing that in a number of industries, including aluminum and solar power. I hope they’re smart enough to gradually let reality and the need to break even (or even make a profit) into the picture, as opposed to letting the situation continue until it’s untenable and they do a nasty “rip the band-aid off in one blow!” type of thing (as with the coal mining industry and Thatcher).

  4. November 30th, 2013 at 15:35 | #4

    Just in case anyone thinks we need aluminium smelters for defence purposes I will point out that it’s not very bright to pay to keep aluminium smelters operating when one instead could directly pay for a stockpile of aluminium. If there is some sort of defence emergency in the future there is no point in trying to use what could be vital electricity, energy, and transportation trying to smelt aluminium when it would be much cheaper and easier to keep a supply of aluminium at hand ready to use. In practice there is of course plenty of aluminium lying around being used for non-vital purposes and this reserve may be more than sufficient as responses to any future defence emergencies are unlikely to involve building tens of thousands of Spitfires.

    My guess is that any defence benefit from stockpiling aluminium would be insignificant compared to actions that clearly boost Australia’s ability to defend itself such as increasing the superannuation contribution amount.

  5. November 30th, 2013 at 16:31 | #5

    The announcement that Rio Tinto is to close its alumina refinery [emphasis added] at Gove struck me for a number of reasons, starting with the fact that members of my family are affected by it. First up it’s worth noticing what’s mentioned (the high dollar and low aluminium price) and what isn’t (the carbon tax and legislation for its removal. Having claimed that he was going to save industries like aluminium smelting [emphasis added] from the carbon tax “wrecking ball”, Abbott is now shown up, once again, as a fraud… So, it seems to me quite plausible that aluminium demand could stabilise over the next decade or two, with the result that most demand can be met by recycling rather than energy-intensive bauxite smelting [emphasis added].

    You have confused two very different stages in the processing: alumina refining and aluminium smelting. There is no such thing as “energy-intensive bauxite smelting”. Roughly speaking, here’s what happens in the modern (electrolytic) process:-

    - The ore, bauxite, is dug up.

    - Alumina is refined from that locally since doing that is not energy-intensive, to reduce transport costs later by reducing weight and bulk. This involves dissolving the alumina in hot, high pressure caustic soda to make a sodium aluminate solution, filtering that, and then cooling it and precipitating the alumina out with a seed crystal.

    - The alumina is transported to somewhere which has cheap energy where the aluminium is extracted electrolytically, something that needs a great deal of electrical energy. This involves graphite lined, water cooled steel crucibles and graphite electrodes (which are gradually consumed), the addition of cryolite (a sodium-aluminium fluoride) in enough quantities to make up losses, and temperatures high enough that the molten aluminium is denser than the molten cryolite/aluminium blend.

    Nothing in any of this connects the carbon tax issues as significant factors in the current alumina refinery closures, though they are very relevant to potential aluminium smelting closures, so none of it has any bearing on whether Abbott is or is not a fraud.

  6. November 30th, 2013 at 16:32 | #6

    Drat, I dropped a closing emphasis tag.

  7. Donald Oats
    November 30th, 2013 at 17:03 | #7

    I’m not sure that aiming for a lower dollar is all that great for the rest of us, at least not without some other adjustments to partially compensate for the diverse consequences of a lower dollar.

    While there is a high foreign investment demand for houses and apartments, the lower the dollar the better for them against the domestic (would-be) buyers of real estate. Wouldn’t it be better to use interest rates to quieten the current real estate upsurge, or even better, to make some adjustments to the negative gearing of investment properties, so as to make it a less attractive proposition? I full realise that lifting interest rates would have broad-ranging consequences across the economy, some good and some bad, but we have so few levers to play with, these days. And Keating tried the negative gearing adjustment in 1985—quarantining it to rental income only—and had to revert back to having it deducted against all sources of income, thanks to a backlash. I think the current government is never going to consider even the slightest reduction to negative gearing of investment property, but I wait in hope of some rationality entering this aspect of our economy.

    At the end of the day, mining and processing of ore are almost disjoint from the rest of our domestic economy: the so-called two-speed economy is a result of this structural feature of Australia’s assets, those being ore bodies, lots of pastural and cropping land, and so forth. The days of cheap electricity are also fading, at least cheap coal-based electricity. I always feel sympathy with workers losing their livelihood, especially through no fault of their own. Unfortunately, one industry’s current woes often reflect another’s good fortune—not necessarily located in the same country or even the same hemisphere. Such is the world in which we live.

  8. John Quiggin
    November 30th, 2013 at 17:06 | #8

    @P.M.Lawrence

    Thanks for this correction, PML, expressed with all the grace I’ve come to expect from you over the years. I thought I’d been careful to distinguish alumina from aluminium, but a re-reading shows I’ve been sloppy.

    More importantly, the reports of the closure made it clear that the high cost of the existing fuel oil plant was a big deal in the closure. The plan was to switch to gas, but the poor economics of the industry made this infeasible. To repeat, the carbon tax wasn’t mentioned, even though energy costs were much more important here than in some of the closures Abbott banged on about as opposition leader.

  9. Hermit
    November 30th, 2013 at 17:22 | #9

    While bauxite and aluminium are less in demand iron ore and coking coal are holding up. This was a puzzle until I saw a TV doco on China’s ‘ghost cities’. It seems the plan is for rural peasants to move into high rise apartments and work in factories. Both the apartment blocks and factories are made with steel frames and the factories make stuff (e.g. cars) from steel. For now China’s demand for steel appears insatiable.

    However some of the ghost cities remain largely empty. At some point the Chinese government will stop building them and demand for our iron ore and coking coal will plummet. I infer those other kinds of mines are where Rio Tinto proposes to send workers retrenched from the Gove alumina plant. I suggest the iron ore and coking coal bubble is not a matter of if but when. If the mining industry can survive it won’t be structural metals
    (Fe, Al) and fossil fuels but space age stuff like lithium and rare earths.

  10. Ikonoclast
    November 30th, 2013 at 17:24 | #10

    Some intersting points.

    The first article JQ refers to (massive growth of production in China) says in part;

    “Chinese producers had instead responded by installing their own refining capacity. This change was largely due to their engineering quick-footedness that allowed them to rapidly increase alumina refining capacity to process both domestic and offshore bauxites.”

    Note the journo’s deceiving mystification of what happened by calling it “engineering quick-footedness”. What really happened was dirigisme, pure and simple. The Chinese state decided it wanted a lot of alumina refining capacity quickly and the Chinese state saw that it was done. The rest of the world, subscribing to and operating on free-market theory (so-called), was wrong footed (perhaps).

    Whether the Chinese state picked a winner or not is still to be seen. Will it be economically and/or militarily advantageous in the long run to China? The Chinese Communist Party clearly thinks it will be. I myself don’t know. I don’t have a crystal ball. Maybe, nations and economies which pursue carbon fibre technology will be better off. There are a lot of unknowns in this.

    The second article linked to refers to “China losing billions”. Then when I read it they lost $1.8 billion. Last time I checked, the plural refers to at least 2 in number. Also, $1.8 billion is chicken feed to a superpower. Don’t get me wrong, I am criticising the journos only.

    In alluding to “peak aluminium” in this context, JQ is correct in implying that peaks can come about through substitution as well as resource exhaustion. Which will be the story for aluminium? Only time will tell.

    What are jet fighter hulls and surfaces made from? (Since someone brought it up.) one site suggests;

    *Outer Surface Components
    39% Titanium
    24% Composite
    16% Aluminum
    01% Thermo-plastic

    So, aluminum, as the yanks call it, still appears to have some, though not prime, importance.

  11. Ikonoclast
    November 30th, 2013 at 17:29 | #11

    Footnote: 20% is missing. Maybe those are classified materials! Dark matter?

  12. Neil Hanrahan
    November 30th, 2013 at 19:36 | #12

    May I also indulge in the pleasure of nitpicking too. Bauxite is refined to produce alumina… oh, d**n it. I went back to get the exact words used and see that the point has already been made. Not an unimportant point in fact because I remember a Griffith Uni academic with environment in his title destroying his pro-Kyoto argument some years ago in a Fairfax letters column by clearly not understanding the chemistry and physics (not to say economics) of turning bauxite into aluminium by way of alumina.

  13. November 30th, 2013 at 19:42 | #13

    In one week the Portland aluminium smelter in Portland Victoria alone can produce more aluminium than is contained in the Royal Australian Airforce’s entire fleet of aircraft.

  14. Hermit
    November 30th, 2013 at 21:11 | #14

    Aluminium like titanium or hydrogen is not rare but takes a lot of energy to reduce to its elemental state. Bauxite is a type of laterite tropical soil at Gove NT and Weipa Qld and surprisingly at Worsley WA. Groote Eylandt manganese is also a type of laterite. The Russians make alumina from a kind of soft granite. The Lucky Country had the fortune to have both plenty of bauxite and formerly cheap energy sources, gas or oil to do the alumina process and coal fired electricity or hydro to do the electrosmelting. Some coal stations like Anglesea Vic and some Tas hydro appears to have been created by state governments mainly to help the aluminium industry. Now we still have most of the bauxite but not the cheap energy.

    China doesn’t have so much bauxite but they are willing to cut corners to get cheap energy. Example children getting lung cancer from coal smoke. Meanwhile we in the West anxious to be seen to be green get China to do the dirty work for us. So not only are 1,000+ Aussie workers losing their jobs at Gove I suspect there is a good chance that the same bauxite will be made into alumina then aluminium in China. As well as CO2 at various stages there are also perfluorocarbons (a potent GHG) emitted by smelters. If the polluter had to pay things would be different.

  15. swearyanthony
    November 30th, 2013 at 22:41 | #15

    How does all this tie into the recent tales of GS &c monkeying with aluminum supplies in the US and elsewhere? See, for instance, http://mobile.nytimes.com/2013/07/21/business/a-shuffle-of-aluminum-but-to-banks-pure-gold.html?pagewanted=all

    I’d *assume* the Chinese state owned enterprises wouldn’t let the investment banks mess with their supply chains – so the investment bank tax would further disadvantage non-Chinese manufacturing.

  16. November 30th, 2013 at 23:03 | #16

    “But it’s clear that prices have to rise just to cover costs, and will rise further as China starts to price the local and carbon costs of coal-fired electricity”

    Why? If Chinese policy makers choose they can subsidise aluminium indefinitely. If they are really following an aggressive industrialisation program, they actually only have to subsidise till their main foreign competitors close down.

  17. Megan
    December 1st, 2013 at 00:23 | #17

    Of course it isn’t “peak aluminium”, in the strict sense, but it certainly follows the pattern of any localised “peak” of any resource extraction.

    If you’re on the Sunshine Coast sometime, go and check out Mill Point (in that case it was Cedar bound for the British, in the 1890s, but the same principle always applies).

    [Due to the ongoing censorship of any mention of even the name of my site - to which I tried a link, and then a mention, and lastly a cryptic mention - I'll do a cut'n'paste]

    On the shores of windswept Lake Cootharaba, about a two kilometre walk from the camping ground at Elanda Point, you’ll find the rare remains of a small settlement. An old chimney, tank stand, mango and guava trees and boiler are some of the more obvious remnants from the nineteenth century company town Mill Point.

    According to Noosa Council/Queensland Government information boards at the site, after prospering during the Gympie gold rush, ‘McGhie, Luya and Company’ invested £2000 in establishing a sawmill at Mill Point, which by the 1880s employed up to 150 men. The sawmill covered around 25 hectares and included workshops for blacksmiths and carpenters, stables, hotel, post office, a school and houses for around 60 families.

    At its peak, the sawmill produced 3 ½ million super feet of timber in one year. Timber getters collected kauri pine and red cedar in Cooloola and Kin Kin scrubs, which was initially transported to the sawmill by bullock teams and later, a tramway. The sawn timber was floated on a paddle steamer downriver to Colloy – on the north bank of the Noosa River at Tewantin. It was then taken by steamer to Brisbane. About another two kilometres north along the easy walking track is Kin Kin Creek, the contrast between the unfelled north side and the cleared land to the south is a striking example of ‘before and after’.

    The saw mill closed in 1892 and the property was transferred a number of times. The early 1890s were a time of economic depression and severe flooding occurred in the area in 1893. Dairy farmers worked the land from 1910 until 1975 when Elanda Point was gazetted as a national park. The Queensland Government took ownership in 1983.

    Last month [November, 2006] Ms Murphy presented a lecture at the Queensland Museum and discussed the historical treasures unearthed by her team of archaeologists at Mill Point. So far the team has uncovered items such as basic cutlery and dinnerware (with a 19th century cable pattern) and beer, whiskey and schnapps bottles.

    Interestingly the only brand of Worcestershire sauce bottle they found was ‘Lea And Perrins’. Ms Murphy said that this could be explained by the fact that the company dictated what was delivered to the settlement. ‘Holbrook’s’ Worcestershire sauce bottles were often found in gold mining settlements. The community clearly dined on fresh shellfish and beef, as evidenced by the pieces of bone and numerous oyster and, pipi shells which have been uncovered. There are plans to also research the traces of the original indigenous uses of the area.

    Jars of ‘Holy’s’ ointment – a multi-function product which claimed to cure sore breasts among other ailments – were found, along with bottles which would have contained patent medicines and tonics with high concentrations of narcotics. Members of the community obviously took pride in their appearance, as two brands of hair loss tonic, perfume bottles, a comb, a metal heel from a shoe, buttons and an earring were also found.

    Ceramic dolls’ faces originating from Germany and miniature tea sets give an insight into how the children played, and the discovery of slates and slate pencils testify to the school that existed at the settlement. Household items including ink bottles, a padlock, porcelain lamp stand and the top of a ceramic baby’s feeding bottle were also found. Many clay pipes have been retrieved – this was the common way to smoke tobacco before cigarettes were invented just prior to World War One.

    The archaeaology of this fascinating site and the personal items uncovered, give an insight into the every day life of the workers and their families and provide an intimate link to the people who lived at Mill Point in the late 19th century. The history of the place, which was founded during a boom and abandoned just as swiftly after only twenty years, illustrates its relevance today for towns which are driven by a solely commercial imperative!

  18. Megan
    December 1st, 2013 at 00:48 | #18

    I assume nobody cares, but my site is:

    “spring” followed immediately and without any spacing by “hill” and then, in the same manner “voice”

  19. Megan
    December 1st, 2013 at 00:50 | #19

    I stand corrected. If I’m cryptic enough I can manage to mention the forbidden site.

  20. December 1st, 2013 at 03:35 | #20

    Notice John Q’s cutting-edge “macro pru” moderation of Hermit! (Example: Mark Carney of the Bank of England has just withdrawn a cheap credit line for UKmortgages, aiming to shift bank loans to SMEs).

  21. Ken Fabian
    December 1st, 2013 at 06:37 | #21

    It’s a metal that is very suited to recycling and unlike most recycled materials it is actual recycling rather than downcycling – ie it can be repeatedly re-used as equivalent to the new material quality rather than at lower quality. Most ‘recycling’ is downcycling with, at best, a couple of reuses at lesser quality before disposal. It is a valuable industrial ‘nutrient’ – in McDonough and Branagh’s “Cradle to Cradle” style (well worth taking a look and read) where materials are preferentially used that are capable of 100% reuse at as-new quality.

    The energy and presumably carbon costs of recycled Al is relatively low compared to new so a greater national and global pool of refined aluminium for reuse seems to make long term sustainability type sense.

    Ultimately, could the refining process be modified to make use of abundant and cheap daytime solar – ie most of the energy intensive work done during the day shift rather than as a 24/7 continuous operation? I doubt these businesses would seek such a model but, if cheap, abundant daytime power becomes the norm, might they seek to take advantage of it?

  22. Ikonoclast
    December 1st, 2013 at 08:29 | #22

    @Cameron Murray

    “If Chinese policy makers choose they can subsidise aluminium indefinitely. If they are really following an aggressive industrialisation program, they actually only have to subsidise till their main foreign competitors close down.”

    Exactly, but always with a caveat to the effect that resource limits might ultimately curb aluminium production. I made substantially the same point higher up when I invoked the concept of dirigisme. People are so indoctrinated with market views now they think that financial sustainability is a real constraint. Financial sustainability is not a real constraint, it is an artificial or notional constraint. Only real material and real energy constraints are real (to be both obviously tautological and pedantically correct). The other real constraint is real political legitimisation and/or constraint. This latter ultimately is material too because it is what humans do with their bodies. Do they comply (go to work, obey etc.) or do they rebel (demonstrate, obstruct, rebel, revolt)?

  23. Hermit
    December 1st, 2013 at 09:20 | #23

    @Ken Fabian
    My understanding is that molten salt electrolysis can be slowed down but not stopped as the content of the pots will solidify. That is a major drama to recover from apparently. Electricity supply contracts have penalty clauses for interruptions. I remember discussing this with some hydro dam workers who offered me (a tourist) a lift in a cable car. OTOH some aqueous electrorefining processes (eg for copper) probably can cope with a blackout.

    Therefore we have some sticky energy supply problems
    - aluminium smelting needs baseload power 24/7
    - steel making needs coking coal
    - aircraft need liquid hydrocarbon fuels.
    Sure there have been experimental alternatives none practical AFAIK.

  24. Fran Barlow
    December 1st, 2013 at 09:25 | #24

    @Hermit

    aluminium smelting needs baseload {fully despatchable} power

    Let’s at least get our terms correct. Baseload describes demand patterns not supply features.

  25. Ikonoclast
    December 1st, 2013 at 10:24 | #25

    @Hermit

    The sticky energy problems do exist but they have solutions. Whether these solutions are complete or only partial will only be told in time.

    1. Renewables can supply energy 24/7 in robust quantities albeit at a lower EROEI which might or might not be a problem long term. Each time I outline how this is possible the information falls into a vacuum. Critics of renewable energy carry right on as if none of the answers exist. Solar convection towers and solar thermal concentrating with salt tank heat energy storage can both meet the requirements of providing power 24/7. A widely distributed network of renewable sources of different types over a continent will also smooth supply to some considerable degree.

    2. If we stopped burning thermal coal and eventually oil and gas, the burning of coking coal would not be a significant issue.

    3. Liquid hydrocarbon fuels can be synthesised from CH4 which in turn can be synthesised from solar energy in various ways. Meeting the requirements for aircraft might be possible. Meeting the requirements for surface transport would not be possible and that all requires different solutions.

  26. Ken Fabian
    December 1st, 2013 at 11:40 | #26

    @Hermit

    Smaller batches? Idle at minimum power overnight? Different methods? In the presence of 24/7 subsidised supply there’s not much incentive to do it differently. Can’t and prefer not to are different things.

    This is an industry that probably likes the idea of nuclear wherever it is running on fossil fuels, but not as much as it dislikes the prospects of carbon pricing or emissions restrictions. Advocating against the latter has more immediate commercial benefits – as well as slotting in neatly with the existing, broader, mainstream church of climate action obstructionism and anti-renewables advocacy – whereas nuclear advocacy doesn’t fit with any current mainstream political agenda in Australia and yields no immediate benefits. As long as that is the case they will shut up about nuclear and find no cause for alarm in government by climate science deniers.

  27. Hermit
    December 1st, 2013 at 12:47 | #27

    I think all forms of new nuclear are too expensive for aluminium smelting, hence I agree with Pr Q we must aim for near 100% recycling. The Russians with their non-bauxite alumina source are probably using a lot of coal power since I note the World Bank just knocked them back for some new coal funding.

    I’m not anti renewables since I dabble in PV, wood cooking, biodiesel and microhydro it’s just I don’t think they can displace enough coal. Germany with $30 bn a year in green levies yet increasing emissions seems to show us strongly diminishing returns after about 25% renewables penetration. Their metals industries are suffering high anxiety
    http://www.spiegel.de/international/business/merkel-s-switch-to-renewables-rising-energy-prices-endanger-german-industry-a-816669.html

  28. Ikonoclast
    December 1st, 2013 at 13:12 | #28

    Well, the bottom line is that eventually (in 30 years or 50 years or a 100?) everything will HAVE to run on renewable energy and renewable resources. Because that is all there will be. So, whatever that supports will be the limit. And if we have overshot sustainable capacity there will be a population decline, total infrastructure decline and complexity decline of some degree. These are ineluctable facts.

  29. hc
    December 1st, 2013 at 13:54 | #29

    I like Hermit’s suggestion to slap a border tax on aluminium imports from China (but not on imports from other countries – if any – which rely on hydropower). I also favour exempting those exports from Australia from any tax or allocating free carbon quotas to producers in proportion to their exports. All academic of course given that we have a silly direct action plan that looks like it will soon take over.

  30. Ikonoclast
    December 1st, 2013 at 14:22 | #30

    @hc

    It would have been very simple and logical to have a direct Pigovian tax on CO2 emissions (say $50 a tonne) and to levy an equivalent import duty on goods made OS which had produced CO2 emissions in manufacture which were not taxed or priced or were taxed or priced inadequately in that country.

    Of course, simple, logical and equitable is not appealing to the neocon shysters who want the playing field tilted extremely in their favour. It is par for the course that complications, obfuscations and delays emanate from the rent seekers.

  31. December 1st, 2013 at 15:51 | #31

    When looking at the AUD and interest rates, how does it work? Lower interest rates might make the AUD fall, but then they may also re-start the housing bubble?

    Is there any harm in stimulating the economy by simply giving money to the poorest, knowing that they will spend every cent?

  32. December 1st, 2013 at 21:18 | #32

    Ikonoclast, you wrote, “Renewables can supply energy 24/7 in robust quantities albeit at a lower EROEI which might or might not be a problem long term.” How did you determine the EROEIs? For producing electricity, Australian coal is under 1:3 while new wind capacity is over 50:1. In other words, more that 3 joules of energy have to be expended through human activity to produce a joule of electricity from coal, while less than 0.02 of a joule has to be expended to get a joule of electricity from wind power.

  33. Megan
    December 1st, 2013 at 23:53 | #33

    @Ronald Brak

    Just on a side point: Are you seriously suggesting that Australian coal has a negative energy return on energy invested?

    It takes twice as much energy to get it to the energy production point as the energy then produced?

    (I know we’ve disagreed in the past – but are there readily accessible figures for this?)

  34. December 2nd, 2013 at 02:50 | #34

    Megan, unfortunately it is impossible to get more than a joule of electrical energy out of a joule of heat energy which is the sort of energy you get from burning coal. We can’t even trade thermal joules for electrical joules one for one. Technically coal plants could be about 60% efficient but in practice in Australia we only manage about half that. So a coal plant that is 33% efficient is only going to turn one third of the thermal energy in coal into electricity before any other considerations are taken into account giving it an EROEI of under 1:3. Efficiency needs to be taken into account otherwise we end up with the strange situation where an inefficient coal plant that use 50% more coal and emits 50% more carbon dioxide per joule of electricity generated ends up with the same EROEI as a much more efficent coal plant. This would obviously be a very weird thing to conclude, but it doesn’t seek to stop people from doing it. As you can probably tell, EROEI is not a terribly practical concept.

  35. derrida derider
    December 2nd, 2013 at 11:13 | #35

    A couple of nuances here.

    Firstly, bauxite is extremely common all over the tropics. Unlike other minerals there is no scarcity value at all – so low operating costs, including both transport costs to a smelter and no requirement for envoironmental remediation, is everything for alumina refining viability. We are a long way from Chinese smelters and (rightly) much less tolerant of lakes of toxic red mud – the wonder is that Gove has been viable at all for the export market, not that the Chinese have built alumina refineries closer to their subsidised smelters.

    The second thing to note is that new titanium (and vanadium and tantalum) smelters are planned, using a much cheaper electrolytic process (rather than purely chemical reduction) recently developed in that traditional home of smelting technology Sheffield, England. The futures market have priced in big falls in the cost of Ti ingots over the next few years, with no doubt more to come. In the long run this may make aerospace and similar hi-tech use of Al (and perhaps composites too) much less.

  36. December 2nd, 2013 at 11:31 | #36

    derrida derider :
    A couple of nuances here.

    The second thing to note is that new titanium (and vanadium and tantalum) smelters are planned, using a much cheaper electrolytic process (rather than purely chemical reduction) recently developed in that traditional home of smelting technology Sheffield, England. The futures market have priced in big falls in the cost of Ti ingots over the next few years, with no doubt more to come. In the long run this may make aerospace and similar hi-tech use of Al (and perhaps composites too) much less.

    Can you tell us more about the electrolytic process for titanium? There are a couple of things about its possibilities that concern me:-

    - It has been unsuccessfully sought for decades, so anything that shows prospects almost certainly has hidden catches. I’d like to know what those are.

    - The current process is an analogue of the original, chemical process for making aluminium. But that was expensive because it had a prior stage to make sodium chemically, which blew out the cost. The titanium analogue uses magnesium for that (or sometimes sodium), but those can now be made cheaply; much of the rest of the cost comes from the need (not present with aluminium) to do an analogue of primitive ironworking after that, i.e. repeated hammering and folding to squeeze out inclusions of waste, only this time in an inert argon atmosphere as well as at high temperature. Would the new process also need that last, expensive stage, even if not as much of it?

  37. Fran Barlow
    December 2nd, 2013 at 12:10 | #37

    @Ronald Brak

    I’d say you’re mixing up categories on EROEI. It doesn’t take much energy to harvest coal in realtion to the amount of carbon extracted. Last time I looked, it was something like 1:35 internationally.

    Plainly, the exact relationship in each case will vary depending on the quality of the coal seam, where it is and hiow easy it is to get at and of course, how far it has to be trnasported from processing (and how much processing is required).

    Once you combust it, as you say, conventional coal plants using black coal are only about 35% efficient at converting the carbon into useable energy. Ultra-critical coal plants may approach 50% but plainly, there’s still a lot of waste heat.

    Using EROEI isn’t all that useful with fossil HC because as people point out, fossil hydrocarbons are “packaged sunlight over geological time” so the process of desequesttration is simply like the energy equivalent of presenting the drawing down of inventories as “work product”.

    Its only salience comes when the actual harvest + pre-process demands more energy than can be despatched at the other end. AIUI we’re a long way from that, and if we weren’t, precisely the cost of the fossil HCs we mostly use to harvest coal would price it out of the market.

    Imagine if to fill your tank with petrol, you had to use half a tank to get to the filling station? You’d arrive home no better off, so filling up would not be feasible unless someone delivered it to you. If you used more than that, you’d be better off permanently abandoning your car and walking.

  38. December 2nd, 2013 at 13:18 | #38

    Fran, I’m not mixed up on categories, but I think that EROEI is often used in a mixed up way. Mining coal and using it for heating gives a very high Energy Return On Energy Invested but in Australia very little coal is actually used for heating. Most domestic coal use is involved in electricity production and the low efficiency with which this is done needs to be taken into account otherwise we can end up with the bizarre situation where using using three tonnes of coal to power space heaters in a building over winter can have the same EROEI as burning one tonne of coal to directly heat the building.

  39. Fran Barlow
    December 2nd, 2013 at 19:57 | #39

    @Ronald Brak

    this source (not a fossil-fuel-friendly one) puts coal eroei on coal as 18. I assume that’s after an adjustment down of 2/3 to allow for losses in conversion to despatchable power as they mentioned that in the article.

    It’s said to be comparable to wind (20) if you take the measurement at the minemouth … Of course, if the aim is to get electricity, you can’t.

    {the usual} + carbonbrief.org/blog/2013/03/energy-return-on-investment-which-fuels-win/

  40. Megan
    December 2nd, 2013 at 21:43 | #40

    @Ronald Brak

    You’re not suggesting that it is possible to get 50 joules of electrical energy from 1 joule of ‘wind’ (kinetic, I think) energy?

    Otherwise you’re comparing apples and unicorns. Not very helpful to use EROEI for one but not the other.

  41. Fran Barlow
    December 2nd, 2013 at 21:47 | #41

    I just found this PrQ. It might be of interest.

    http://www.businessspectator.com.au/article/2013/12/2/energy-markets/carbon-tax-mindless-blindness?utm_source=exact&utm_medium=email&utm_content=533570&utm_campaign=cs_daily&modapt=

    I liked this line:

    Gove has a fantastic bauxite deposit but it is not an ideal location to refine bauxite into alumina. Refining bauxite into alumina requires lots of heat and that requires lots of energy.

  42. December 2nd, 2013 at 21:52 | #42

    Coal in Australia should have an EROEI considerably better than 18:1 by the time it reaches a power plant, but once there the sad fact is the inefficency of producing electricity from coal makes its EROEI average less than 1:3. An unavoidable result of the fact that in Australia we use more than 3 joules of thermal energy from coal to produce one joule of electricity. Of course one could ignore this efficiency issue, but then one would be unable to avoid the conclusion that Hazelwood power plant, one of the most inefficient brown coal plants in the world, has about the same EROEI as the modern black coal Kogan Creek power plant.

  43. December 2nd, 2013 at 22:08 | #43

    Megan, unfortunately the laws of phyics so far do not allow 50 joules of electricity to be obtained from one joule of kinetic energy from wind. Off the top of my head I believe about one percent of the energy of the sun goes into moving wind around, so that would make the EROEI of new wind in Australia around 1:2 or better. And the efficiency of carboniferious swamps at converting solar energy into peat might be quite high given the inability of decomposers to breakdown lignin back then, which might make the EROEI of coal for producing electricty 1:10,000 or possibly even better. But I’d be more inclined to say 1:100,000 for now. It would be possible to made a decent estimate for some coal deposits, but it’s not something I’m capable of doing just at the moment.

    But generally, or rather, pretty much always, the solar energy required to push air around or make plants grow hundreds of millions of years ago isn’t included in EROEI calculatons. It’s taken as given.

  44. Megan
    December 2nd, 2013 at 23:12 | #44

    @Ronald Brak

    That’s why I was puzzled that you wrote:

    How did you determine the EROEIs? For producing electricity, Australian coal is under 1:3 while new wind capacity is over 50:1. In other words, more that 3 joules of energy have to be expended through human activity to produce a joule of electricity from coal, while less than 0.02 of a joule has to be expended to get a joule of electricity from wind power.

    But now your 1:3 for coal only starts once the coal is in the furnace. In that case it’s more correct to say that zero “joules have to be expended through human activity to produce a joule of electricity from coal”, since the coal – once in the furnace – burns all by itself, no human joules required to make it burn.

    I don’t care for a pointless fight at the moment. In fact, I never do.

    Thanks for answering my query.

  45. December 3rd, 2013 at 00:35 | #45

    Megan, energy has to be invested to get that coal into the furnace and energy has to be invested to make that furnace. That’s the initial investment and the heat given off by the coal is the return on that investment. Unfortunately when it comes to making electricity from heat we don’t get a very good return on the investment. But I wouldn’t worry too much about EROEI. I really don’t see how it is helpful compared to things we really want to know, such as what is the cost and how much CO2 and/or other pollution does it cause?

  46. Megan
    December 3rd, 2013 at 00:59 | #46

    @Ronald Brak

    Yes, I’m well aware of that. It appeared that you weren’t, and I wanted to check whether you knew something I didn’t or were just misstating that fact.

    Wind power is great. The power behind coal has nothing to do with EROEI and everything to do with the failure of our democracy, media and economics.

  47. Fran Barlow
    December 3rd, 2013 at 08:32 | #47

    @Ronald Brak

    In my experience Ronald, your posts here are consistently worth reading, but I am genuinely perplexed at your contributions above in this topic.

    EROEIs are an interesting metric but their principal application is to the evaluation of the feasibility of harvest of fossil hydrocarbons (FHCs). That’s because in an energy system dominated by resort to the combustion of FHCs, almost all energy inputs are from the same finite and polluting pool.

    It also matters which fossil hydrocarbons are used, because if the FHCs are harder to get in EROEI terms or more valuable for some other reason (e.g. despatchability) than those being harvested, the world is worse off. Using oil to get coal fits this description.

    EROEI is obviously far less salient if significant parts of the energy input are renewable or “use it or lose it” (such as wind, wave, solar etc …) As long as FHCs are a significant input, EROEI has salience. That’s one good reason for considering, when building any energy infrastructure (such as solar arrays or windfarms or hydroelectric dams or coal/nuclear plants) the lifecycle carbon footprint of the infrastructure and setting that off against emissions foreclosed by the infrastructure to find a payback figure from the “embedded” emissions. We also do this with cars, so as to see the point at which low emissions vehicles become superior to higher emissions vehicles notwithstanding embedded emissions costs.

    If coal were an abundant, low in energy cost-terms to harvest and completely renewable and carbon free source, then EROEI would be almost entirely irrelevant, even if the coal plant was only converting one third of its notional heat value to something useable. In practice, all energy technologies suffer losses converting one form of energy into another, so in that narrow sense, all technologies have EROEIs that are less than 1:1. What you may be saying is that when one mines coal and allows for the FHC energy costs of harvesting it the return is roughly 18:1 and thereafter when one converts it to electricity in a thermal power plant roughly 2/3 of the heat value (3/4 if lignite) is lost as waste heat putting the activity in EROEI terms at less than 6:1 as it leaves the plant. More is lost in transmission and of course plants have to operate continuously and can’t be greatly ramped down for long without risking outages so there are more losses there so by the time an end user gets it, the EROEI is dreadful.

    By way of comparison, I understand that the energy losses on food are pretty heavy. Apparently it takes on average 10 calories of energy to deliver 1 calorie of energy into a human mouth, and more in the case of man foods consumed by first worlders. Most of that is supplied by FHCs too.

    One can argue that the EROEIs on FHCs are too low to make them sustainable over time, and I’d agree. Yet they’re not yet lower than 1:1 or they simply wouldn’t be used.

  48. derrida derider
    December 3rd, 2013 at 11:12 | #48

    PM, the FFC process produces hi-purity metallic powder rather than sponge – no need to hammer the bloom in pre-industrial revolution style. Try googling “Metalysis”, or look at this report.

  49. December 3rd, 2013 at 11:44 | #49

    @derrida derider
    Ah – then there is still usually a “need to hammer the bloom in pre-industrial revolution style” (apart from using rolling mills or whatever to do it) to get solid billets conveniently, just not as much need as it wouldn’t need to be done repeatedly interspersed with folding to squeeze out inclusions. The only exceptions would be if sintering gave results fit for purpose (which still needs energy, and might use some hammering, rolling or a high pressure inert atmosphere anyway), or if for some reason it made sense to use even more energy to melt the titanium in expensive refractory crucibles for casting.

  50. December 3rd, 2013 at 12:22 | #50

    Fran, apart from maybe a few high tech pilot plants, when it comes to producing electrical energy all coal power plants have EROEIs of less than 1. This is because they all use at least two joules of thermal energy to generate one joule of electricity. Ignoring all other energy inputs this means their EROEIs can be no better than 1:2. All coal ever burned in Australia to produce electricity has had an EROEI of less than 1:2. So why do we burn coal to generate electricity when its EROEI is less than 1? It’s because people could make money that way. When there’s money to be made an EROEI of less than 1 won’t stop people from doing something.

  51. December 3rd, 2013 at 13:06 | #51

    Fran, an example: Congratulations! You have just inherited a coal power plant and attendant coal mine with an average output of 200 megawatts. The power plant is 33% efficient and like most Australian coal plants it only costs a few dollars a tonne to get the coal from the ground to the boilers. A tonne of coal when burned in an excess of oxygen produces 24 gigajoules of thermal energy which is then coverted into 8 gigajoules or 6,666 kilowatt-hours and a lot of waste heat. You can sell the electricity, after subtracting a pilsner weak carbon price, for an average of 5 cents a kilowatt-hour. The mine and coal plant are completely paid off and operations and maintenance come to about 1.5 cents a kilowatt-hour. This means that each year you run the plant, you personally, as the sole owner, will make over $60 million dollars from the sale of electricity. Now you might say that because the plant has an EROEI of less than 1:3 for producing electricity you will shut it down and leave it as a rusting monument to humanity’s folly, but would you really forgo all that money? Wouldn’t you be tempted to run it for at least a month or two just to save up a little nest egg and maybe buy a small chateau in France? And even if you’re ethical enough to close it down right away, how many other people who inherited this mine would be? Call me cynical but I think most people would keep the coal plant running, low EROEI be damned. Maybe they would give $10,000 to Philippine disaster victims or sponser a child or something to make themselves feel better.

  52. Megan
    December 3rd, 2013 at 14:17 | #52

    @Ronald Brak

    The “3″ in the ratio is misleading.

    The energy in the coal is already in there. In the sense of EROEI it doesn’t come into play. The EROEI counts the energy required to excavate, process and move the coal into the furnace as against the useable energy that comes out the other end of the process (in this case, electricity. In the case of oil, the amount of work it does in ,say, a care engine).

  53. December 3rd, 2013 at 14:33 | #53

    Fran, sorry, a tonne of black coal in a 33% efficient coal plant would produce about 2,200 kilowatt-hours, not over 6,600. Sorry about the mistake. It doesn’t change the point of my previous comment.

  54. December 3rd, 2013 at 14:44 | #54

    Megan, are you happy with burning the burning of three tonnes of coal to heat a building with electrical resistance heating having the same EROEI as buring one tonne of coal to directly heat the building?

  55. Megan
    December 3rd, 2013 at 18:00 | #55

    @Ronald Brak

    It depends on how you define “happy”.

    I’m ‘happy’ to accept at face value the premise that a building could equally be heated by using the direct heat from burning 1 unit of coal or by the electricity produced from burning 3 units of coal.

    But in either case the coal doesn’t just turn up in the furnace all by itself. Energy is required to get to the point where some form of energy, in some amount, is useable.

  56. December 3rd, 2013 at 20:52 | #56

    I certainly agree, Megan. Last time I checked pieces of coal didn’t have little arms to build coal plants with or little legs to walk inside once the job was done.

  57. Megan
    December 3rd, 2013 at 21:13 | #57

    @Ronald Brak

    Are you embarrassed?

    No need, we all make mistakes. It’s OK.

  58. December 3rd, 2013 at 21:24 | #58

    No, I’m not embarrassed. Why? Is my web cam on?

  59. Megan
    December 3rd, 2013 at 23:10 | #59

    @Ronald Brak

    You suggested that EROEI for coal is 1:3. It isn’t. It was pointed out that EROEI refers to the external energy inputs required to get an energy return from, in this case, coal. You moved the goal posts. I pointed out, again, that EROEI involves the energy inputs to get to the point of producing a useable energy return. You introduced the concept of bits of coal with little arms and legs. I, apparently incorrectly, took that as a concession wrapped in a churlish refusal to accept the point conceded. Hence: embarrassment.

    It doesn’t matter. The EROEI of Australian coal isn’t going to go away, unfortunately.

  60. December 4th, 2013 at 01:37 | #60

    I think I see the problem, Megan. You think we were arguing while I thought I was explaining something to you that you were having difficulty understanding. An argument is a connected series of statements intended to establish a proposition. If you tell me what your proposition is, and, very importantly, tell me what you think my proposition is, then provided we agree on what our propositions are and that the basis for an arguement exists, then I will gladly argue with you.

  61. Martin W
    December 6th, 2013 at 16:45 | #61

    Mixed feelings up here re Gove and alumina refnery.
    Some say good riddance the indigenous people never wanted it anyway.
    Unions say thay are looking at legal action as the AWU claims that, under a 2011 agreement, Rio Tinto is legally obligated to keep the refinery open if it is to mine bauxite at the site.
    ABC radio said yesterday that no, the agreement only states that the mine must remain open and working and does not refer to the refinery, therefore they can dig it up and ship it out holas bolas, news at 11.
    Most Gove locals are incensed with the mishandling by successive NT govts to lock up the gas supply/price. Doomsayers are out in force.
    Some more pro-active locals say good, now we can focus on some decent development i.e. sustainable eco-tourism.
    I have been to Gove a couple of times, the drive is absolutley awesome, some fantastic country, notably beautifull as you pass through arnhem land where no cattle have been allowed, lots of native grassess, and healthy timber. Couple of excellent river crossings, it is only about a 14 hr drive from Darwin, so pretty close really. When you get there, the best stuff is anywhere but the town really, great bush camping, great beach 4wd, great fishing, terrific people to meet, brilliant little outstations. And best of all you need to apply for a permit to go, so limited numbers of tourists really.

  62. Hermit
    December 6th, 2013 at 17:19 | #62

    @Martin W
    A Peak Oiler would say that oil fired alumina plants are simply the first to go in a long line. A couple of years later 14 hour drives for recreational purposes become out of the question. A couple of years after that bulldozers to dig bauxite and ships to take it away for processing get too expensive to run. That’s why they call aluminium frozen energy.

  63. December 6th, 2013 at 23:20 | #63

    The Bayer process generally used to process bauxite into alumina could use solar thermal as a source of heat. However, developing a method to use solar thermal for industrial processes like this would be very expensive, or at least it would be the first few times it is done. And solar thermal may well not turn out to be cheapest low emission option. Right now we are better off putting our efforts into building renewable capacity in Victoria and cleaning up one of the filthiest grids in the world. We can work out the best way to power a remote alumina refinery next week.

  64. Martin W
    December 7th, 2013 at 12:07 | #64

    @Hermit
    OK well the agreements between the NT govt and Rio Tinto go back a long way, the initial EIS stated very clearly that a transition from diesel to gas power generation was a requirement for future viability.
    Feb 2013 the then CLP leader, Terry Mills announced the deal had been done to committ and transpoert gas to Gove; “The Gove alumina refinery operated by Rio Tinto Ltd will stay open after the Northern Territory government pledged to release ten years’ worth of its contracted gas reserves to power the plant”, “The Commonwealth government has previously indicated it would be prepared to underwrite the $1.2 billion cost of building a new pipeline and other infrastructure to get the gas to Gove, which would deliver a boost to the Top End economy”.
    Fast forward to mid March 2013 and T Mills is dumped in favour of Adam Giles and then he decides to re-negotiate the entire deal; “Under the original March agreement with Rio Tinto subsidiary Pacific Aluminium, the Northern Territory government would have supplied some 300 petajoules (PJ) of gas over a 12-year period.
    However, Giles last week said that the gas deal, which was subject to a due diligence, contained “unacceptable risk” to the Northern Territory economy and its taxpayers, which would have faced a A$3.2-billion gas pricing risk. He also flagged the possibility of energy shortages in the long run.
    Instead, the state government is now proposing to sell Pacific Aluminium 13 PJ of gas a year, over a 15-year period, for a total of 195 PJ.
    “The alternative proposal gives longer-term certainty to the Gove community while protecting Territory taxpayers from billions of dollars in financial risk,” Giles said.
    Obviously the next complication with it all is the change of government federally, the NT simply does not have the tax and revenue generation base to do it alone, we continue to be dependent on financial support from the federal government and that is not going to change anytime soon.

    So it is pretty understandable why the community is unhappy with the CLP and Adam Giles, and of course Rio Tinto is protecting it’s own interests with little to no regard for the imapct on community.
    As per usual, absent from the debate is the Indigenous owners point of view, what they want and how they see it; par for the course really. Particularly in light of the fact that we are still suffering under the yoke of the intervention.

    A 14 hour drive into remarkable country with the best stuff and the end of the road is just one of the highlights of living up here, recreational yep, food for the soul yep. Come and check it out Mr hermit, be happy to show you around. :)

  65. Hermit
    December 7th, 2013 at 13:38 | #65

    RB I’m waiting for your calcs on how much solar it would take to run the night shift or wet season at Gove.
    MW I already live in the bush but 20km from a ski area. Dunno if I’ll ever get to the Top End.

    Way upthread I suggested unprocessed bauxite from Gove could be sent to China but for now that will be the alumina plants at Gladstone Qld which also process Weipa bauxite. However since Gladstone is getting into major LNG export their gas price will escalate as well. So China could get the bauxite after all. Those crazy Aussies with their carbon tax.

    For the 160C heat required for the Bayer process 24/7 I note some of the new mini-nukes on the drawing board are at aimed at heat rather than electricity. They will be too late to save jobs but note Ranger uranium is also up that way so the NT is not a nuclear virgin. As well as onsite diesel and fuel oil there are offsite CO2 factors such as caustic soda production. If that is powered by cheap grid electricity (chloralkali process) our good friend coal is never far away.

  66. December 7th, 2013 at 15:29 | #66

    Hermit, I started to work out how much solar power it would take to run Gove even though I said we could worry about it next week, but then I realised that you may not actually be asking for information. You may instead be arguing. So I thought for a while about what the proposition you might be arguing in favour of could be. You mentioned 160 degrees which is a temperature that is easily reached inside a solar cooker which is something that’s popular in a lot of developing countries and you mentioned nuclear power. So, if you are arguing, would the following be your position:

    Hermit’s proposition: Nuclear power can heat bauxite at a lower cost than large scale solar cooking in the Northern Territory.

    Is that correct?

  67. Hermit
    December 8th, 2013 at 06:19 | #67

    @Ronald Brak
    Correct but there is a catch. I’m not talking about just the middle of a cloudless day but a week with overcast rainy conditions as well as nights. Assume there is no oil or gas as a standby heat source. For comparison purposes assume a 200 MW thermal mini nuke costs a billion dollars or $5 per watt capex.

  68. December 8th, 2013 at 13:40 | #68

    Hermit, why assume that a 200 MW (electrical output) nuclear plant can be built for $1 billion when the estimated cost for Hinkley C which is to be built at an existing nuclear power site and in a country with an existing nuclear power infrastructure, is considerably more expensive per MW? If small reactors can be built at that cost why aren’t they building them in the UK and saving themselves over six billion dollars on the cost of Hinkley C?

  69. Hermit
    December 8th, 2013 at 15:30 | #69

    @Ronald Brak
    The first of the US approved small reactors won’t be ready til 2022 on the current pace. The Hinkley C units will be Areva EPRs of about 1600 Mwe I believe. Their average operating cost is expected to be low despite the high initial capex. Areva is heavily tied in with Electricite de France who own other British nukes and there may be some kickback to Chinese customers who are also putting up capital for the UK build. The Chinese seem to know how to build the same machines quicker. The capacity also had to be large to get the ‘strike price’ guarantee. Therefore in the medium term it was the big French units or nothing.

    The UK is also looking at US 4th generation reactors to burn up their plutonium stockpile. If they or the small US modular light water reactors become available ahead of time perhaps the Hinkley decision will seem slow and lumbering. Again the French have the leverage to slow it down. I don’t think small reactors will be used in ore processing in Australia we’ll just keep making excuses to burn coal or hand the work to China and India.

    It seems like that raw bauxite from Gove will be shipped to the Yarwun and QAL alumina refineries at Gladstone. Within a year or two they will do a dummy spit about the gas price. If Abbott is PM he’ll either quarantine some gas from LNG export or or hold the free market line. In the latter case I think a greatly reduced tonnage of raw bauxite will then go to China where the primary energy source will be trivially carbon taxed coal.

  70. December 8th, 2013 at 17:00 | #70

    Hermit, if you are going to assume what the cost of nuclear will be in the future, can I just assume that in the future solar thermal will cost less than half as much as nuclear? If not, why not? In fact, I think I’ll assume that solar PV will be installed for a dollar a watt by the time your small reactors are ready which means that using PV to generate electricity and then generating heat from that electricity would be cheaper than the cost you assumed for your small nuclear plant. (Passive thermal storage is both simple and cheap and not a problem.) Using PV to might seem an odd and inefficient way to generate heat compared to solar thermal, but at least it’s not as odd as building a nuclear reactor to process bauxite.

  71. Hermit
    December 9th, 2013 at 10:33 | #71

    @Ronald Brak
    You could assume we’ll all get around in jetpacks instead of cars. PV is down to $1/w as opposed to $19 (Ivanpah) or so for solar thermal with storage, some of which can (just) operate 24/7. However they will still need an oil or gas boost to cover rainy weeks such as in the NT wet season. BREE’s 2012 energy technology (AETA) report suggests (Table 4.25) solar thermal with storage could cost $200 per MWh by 2020. They have small nuclear (Table 4.38) costing $120 per Mwh.

    Yes it does seem strange to power mines with mini-nukes. If we can’t adjust our thinking we’ll be like meat eaters who don’t care to think of abattoirs. We’ll just get someone else to do the unseemly work for us. Assuming Gladstone gas gets too expensive to process Gove bauxite that means shipping raw bauxite to China. When we pay top dollar to import aluminium made from our ingredients our conscience will be clear.

  72. December 9th, 2013 at 13:07 | #72

    So Hermit, your proposition isn’t: Nuclear power can heat bauxite at a lower cost than large scale solar cooking in the Northern Territory.

    It is: Nuclear power can heat bauxite at a lower cost than large scale solar cooking in the Northern Territory in the future.

    Hermit, the operating life of many remote mining projects is often a decade or less. How can a nuclear plant be profitable when it will be abandonned in such a short period of time?

    Why would anyone build a nuclear reactor to provide heat for mining purposes at the cost you give when burning wood chips or other biomass would be a fraction of that amount?

  73. hix
    December 9th, 2013 at 19:17 | #73

    My impression is that the car companies still consider aluminium an important material to reduce the co2 emissions of cars. They are finally makeing a big effort to do so. In particular Audi mainly works with ever more sophisticated steal/aluminum combination. At least thats the story they tell in their public presentation at the Autostadt (ofc, most real life Audi are big fast gas guzzlers) . Only BMW is betting almost solely on huge fast progress with carbon. China btw, seems to do similar things in the carbon market, as in the aluminium market. It doesnt have to be that way. Carbon and aluminum could be produced only in places like Iceland, where cheap green electricity from water and geothermal is abundant and hard to transport. I hope we get there soon. Its one of the cheaper ways to avoid co2 emissions.

  74. December 9th, 2013 at 22:25 | #74

    One of the advantages of steel is it is currently easier to repair than aluminium or carbon fibre. But now we are shoving all sorts of collision avoidance stuff into cars which will make accidents less common, this is less of an issue. Also 3D printing may lower the cost of replacement parts. (Unless of course we let a large country bully us into making downloading the specs of generic spare parts a crime.)

    And an interesting thing with aluminium is eventually its production will peak, and since it is almost 100% recyclable this may happen reasonably soon, particularly if various improved carbon compounds start taking its place in many applications. And we last thing we want is to be left holding the bag when this happens and owning lots of new refining and smelting infrastructure that will never pay for itself.

    Now just when aluminium production will peak all depends on what happens in Nigeria and whether or not Indians go in for aluminium siding, but given how close China appears to be to living off its own recyled aluminium, it may not be long. (Sure they still need a lot of aluminium to complete and update their grid, but the bulk of the work appears to be done.)

  75. December 10th, 2013 at 22:07 | #75

    I did an unusual thing today and read a newspaper and found out that Indonesia is apparently going to ban the export of raw ore from mining operations. Apparently they think doing this will result in value added industries taking off. This wasn’t a sudden thing, it was in the pipeline for a long time, but apparently only recently it looked at though it was pretty sure to go ahead. This means China will be looking for additional unrefined bauxite to import and this may have been a major factor in the decision to close the Gove refinery.

  76. Hermit
    December 11th, 2013 at 05:45 | #76

    From what I can work out alumina eliminates 30-40% of the bulk of bauxite. As well as aluminium compounds bauxite also contains moisture, iron oxides, inert clay and silica. If ships carry Gove raw bauxite to China then they are burning 30% more fuel from the outset plus the later processes. Yet another greenhouse emissions source which comes off Australia’s account along with jobs and profits. We will become a nation that simply digs up things and sells them cheaply, the Nauru model.

    The bulk transport problem is also why Iceland can never be the world centre for electro smelting…we’ll burn fossil fuels regardless. Another suggestion has been DR Congo’s Grand Inga Dam if it is ever expanded to exceed the 30 GW from China’s Three Gorges Dam. Australia has more bauxite than anybody just not the low carbon electricity. Perhaps the deposit on a soft drink can should be $1 so we’ll value aluminium appropriately.

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