Auto, power firms save millions swapping copper for aluminum

Tue Mar 15, 2016 3:19pm EDT
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By Eric Onstad, Yuka Obayashi and Reem Shamseddine

LONDON/TOKYO/JUBAIL (Reuters) - Manufacturers are abandoning copper for its lighter and cheaper rival aluminum after a decade of technological innovation that is saving some companies hundreds of millions of dollars.

Japanese auto giant Toyota (7203.T: Quote) and Saudi's power company are among those making the switch while Sapa, a supplier of aluminum components, said it has seen a pickup in demand.

Some sectors including shipbuilding, building construction and electric circuitry will still need copper's high conductivity, flexibility and durability.

But developments in aluminum wiring that compensate for lower conductivity and less flexibility, new ways to stop corrosion and more efficient conductors, mean there is more scope to replace copper in power grid cables, auto wiring, air conditioning and refrigeration systems.

Saudi Electricity Co. said it has already saved 2.4 billion riyals ($640.09 million) by shifting from copper to aluminum in its medium voltage distribution network.

“We started more than a year ago and we plan to continue,” SEC’s Chief Executive Ziyad Alshiha told Reuters.

A push for innovation to overcome the obstacles to substituting the two metals gathered speed in 2011 when copper prices spiked to $10,000 a tonne while aluminum, suffering from a supply glut, was $2,525.

The price gap has more than halved, but aluminum is still around $3,400 cheaper than its rival.   Continued...

A worker counts copper wires at PT Voksel Electric at Cibubur district on the outskirts of Jakarta August 23, 2013.  REUTERS/Beawiharta