Alcoa, Inc. (AA) Chairman & CEO Klaus Kleinfeld spoke with FOX Business Network’s Liz Claman about the ways in which aluminum is becoming more relevant and manufacturer’s number one choice for producing items from cans to cars. Kleinfeld said that the United States auto industry has “totally” recovered and he expects aluminum to be in higher demand in the sector as a result of new emissions regulations that have manufacturers looking for ways to “make the car lightweight and still afford the same comfort and safety.” He went on to say aluminum ETF’s will “absolutely” create a spike in prices but it also is “an indication of the attractiveness of the metal as an asset class.”
Here are the key highlights from the interview, courtesy of Fox Business Network:
On whether the US economy is recovering:
“The US already has come back. Automotive is a large part of the US industrial complex. Aerospace, another big part. And the growth industry. I am really optimistic about the growth potential the US has.”
On whether the automotive industry has recovered:
“Totally. The US auto industry has had a really nice comeback.”
On whether auto sales will hit a plateau:
“You have to divide between the west and the east. In China and India and other places that are growing tremendously, we will continue to see numbers going up. The west it might plateau but it was nice to see the growth last year and we will also see the aluminum content in cars will increase. With new emissions regulations that are out people are looking for how can I make the car lightweight and still afford the same comfort and safety. And there aluminum comes right in.”
On the benefits of aluminum over copper:
“Relative to copper this is a great deal. We see a big time replacement going on. It is cheaper and you get a weight advantage. Copper is three times the weight of aluminum and twice as conductive. We are aluminizing a lot of product areas. It’s lighter, its strong, its recyclable and its heat conductive. ”
On whether aluminum ETF’s coming into the market will spike prices:
“Absolutely. ETF’s will have an effect and they are also an indication of the attractiveness of the metal as an asset class. There is a lot of uncertainty in the world and people are saying this is a great asset. We see growth this year, we project 12% last year 13. We think under 2020 the market will double. So where do you have those growth projections?”
On whether Chinese consumption of aluminum is likely to drive prices up:
“That is certainly a possible scenario and I think it’s a very likely scenario. We have been that stating to happen last year. Sustainability is a big issue. They don’t have enough energy certainly they don’t have enough clean energy so it makes sense in a globalized world to get aluminum imported from places like Iceland where it is all hydro based.”
On the changes taking place in Egypt:
“Obviously we are writing history again. Signs of change are always something you have to judge at a later point in time. I think anything that brings stability to the Middle East is highly appreciated.”
On Alcoa’s operations in the Middle East:
“I think the most important thing is that wherever you are you live with your values or your standards and try to bring work to those places. There is a big very qualified group of people in the Middle East and I think it is very good that projects are underway like ours. We are building the largest metals and mining complex that has ever been built.”
On whether he has a target or prediction for aluminum pricing:
“The most important thing is not the absolute price it is the relative price compared to other materials. And it’s not just about pricing. Look at the composition of what we call the “miracle metal”. It’s fully recyclable 75% of all aluminum ever produced is still in use today. When you throw away a can an aluminum can here in the US, it comes back as a can 60 days later.”
On Nissan Renault CEO Carlos Ghosn Nissan stepping down from the board of Alcoa:
“I am very sad he has taken that decision. Carlos is a great guy and he knows the auto industry and he has been a great support on our board. The automotive industry is going through tremendous change. Carlos runs Nissan and Renualt and he is a frontrunner. So there is always a question of how much extra work can you take on.”
On whether he plans to replace Ghosn with another automotive industry veteran:
“We do have automotive capabilities. Ratan Tata is on board and is one of those visionaries.”
On whether he was brought in on the redesign of the Pepsi can:
“Absolutely. Pepsi is a great innovative company in packaging. Aluminum plays a big roll.”
On their commitment to clean energy:
“We have been founding fathers of US cap movement at a time when the administration was not necessarily pushing for CO2 emissions regulation. We are absolutely for it. We believe it is the right thing. We internally have reduced our CO2 emissions tremendously.”
On whether cap and trade is the answer to the energy crisis:
“If done in a smart way it could be but it’s a global problem. I think the real issue is how do you find a global solution the creates a level playing field.”
On their debt structure for the $8 billion they currently owe:
“We have continued to pay it down through the recession.”
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