I think you would be correct, but there is more to it.
As I recall, the aluminium plants in the Pacific Northwest were a result of the Federal Government wanting to take advantage of the potential of plentiful, cheap hydroelectric power. There weren't a lot of people in the area at the time, so if the dams were built, there would be a lot of excess power, which could not economically be transmitted to places that needed it, i.e. cities. Therefore another consumer of power was needed. One way to use the power was to build aluminium smelters, which use an enormous amount of electricity, due to the smelting process. Electricity is used to separate Al metal from its input material Alumina, which is refined from its source Bauxite. Al2O3 is the natural form in which aluminium occurs.
I believe the electricity producers signed long-term deals with the alu smelters giving the smelters very favorable prices. Over the decades, more people moved to the Pacific Northwest thus increasing the number of customers for the electricity producers, leaving them less dependent on the alu smelters. When the old contracts expired, the price of electricity jumped and the cost of producing metal became unattractive.
The structure of the aluminium business has changed tremendously over the last 40-50 years. When I started trading alu in the late 1970s, Alcoa was the big US producer and Alcan was the big Canadian producer, which did a lot of international business. They had been one company until broken up by the US government for reasons of monopoly. Both companies held significant entities around the world, but Alcan was very active around the world. For example,
Comalco was a big subsidiary of Alcan in Australia.
Pechiney was the other large western group, which was out of France. It also had significant holdings around the world.
Things changed when the USSR fell, as there was huge production of the metal across the country. For some time, international traders and consumers did not see ex-USSR material as being of the same quality as Western producers, but over time it became acceptable. In any case, the sudden increase in the tonnage of material available for international trade was very disruptive in the trade.
Until the last couple of decades, the international price of aluminium was very unstable and there could be huge swings in the market price. Over time, the industry consolidated and a price which covered costs and gave a profit seemed to come about. For something like 20 years, the international price of primary alu ingot has been the most stable of all primary non-ferrous metals.
Since I left primary alu trading, China has come on board and is now, by far, the world's largest producer, now producing something like 35 million tons per year. This is simply amazing considering its recent position.
World Smelter Production and Capacity:
Production Year end capacity
1994 1995e 1994 1995e
United States 3,300 3,350 4,160 4,180
Australia 1,320 1,300 1,420 1,420
Brazil 1,200 1,210 1,210 1,210
Canada 2,250 2,240 2,280 2,280
France 400 400 422 422
Norway 857 845 887 887
Russia 2,670 2,710 2,970 2,970
Venezuela 580 600 610 630
Other countries 6,570 6,650 8,020 8,180
World total (rounded) 19,100 19,300 22,000 22,200
You will note, China was not listed on this US Geological Survey list, but today produces more alu than the whole world did in 1995, i.e. 22,000,000 million tons. The USA produces less than 800,000 mt a year. The demand for primary alu ingot is now elsewhere.
