The COVID-19 pandemic and subsequent global economic shutdown have had dramatic consequences for numerous industries.
The shutdown has forced London Metal Exchange (LME) prices for aluminum below sustainable levels for U.S.-based producers.
Two U.S. aluminum smelters were considered for closure because of low LME prices prior to the virus outbreak, primarily due to Chinese overproduction and energy subsidies.
With the COVID-19 crisis, the remaining U.S. production capacity can’t economically compete, placing access to an essential metal for U.S. industry, and U.S. sovereignty, at risk.
The PRC dominates global aluminum production, with as much as 60 percent of the world’s capacity. China has subsidized the rapid expansion and saturation of the industry. The highest cost in aluminum processing is energy. The Chinese Communist Party’s (CCP) economic hybrid system subsidizes power for producers.
Cheap, subsidized PRC aluminum has flooded global and U.S. markets since the PRC joined the World Trade Organization (WTO) in 2001. As a result, the number of aluminum smelters in the United States has fallen from 23 to seven since 2001. The outcome has forced U.S.-based facilities to close, and put countless Americans out of work.
The shutdown or curtailment of the remaining U.S. aluminum smelters would force American industry to depend on foreign imports for a critical defense and economic resource. In a perilous moment in history, the United States’ and the global future would be dependent on the CCP’s market manipulations for one of the most critical defense-related materials.
In the president’s National Security Strategy, maintaining the U.S. defense industrial base is essential. American industry depends on aluminum, the most recyclable metal on the planet. It’s essential for future economic growth, and defense.
The United States can’t allow CCP “authoritarian capitalists” to dominate this critical industry.
- Designate the industry as a critical national defense priority, and create a national reserve stockpile of aluminum—the price is low, buy and hold. Purchasing a National Aluminum Reserve would provide immediate demand to reduce inventories, and allow for a bridge through the COVID-19 pandemic.
- In this time of crisis, establish “Buy American Aluminum” policies for all U.S. defense and stockpile purchases.
- Provide loans and grants to U.S. facilities in the proposed phase IV economic stimulus infrastructure legislation for upgrades that will improve competitiveness and environmental efficiencies to compete with the PRC.