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Automakers In An Aluminum Rush : News

Automakers are in a "race" to secure aluminum supplies as they use more of the metal instead of steel, said Constellium, which is buying another aluminum fabricator in the U.S. for $455 million.

Constellium agreed to acquire closely held Wise Metals Intermediate Holdings and assume $945 million of debt. Amsterdam-based Constellium said today it plans to spend as much as $750 million by 2022 to boost Wise's capacity.

Other companies in the U.S. planning to expand to meet auto demand include Alcoa Inc., the country's largest producer of the metal, and Novelis Inc., a unit of India's Hindalco Industries.

Cleveland-based Aleris Corp. said on Sept. 24 it will build a $350 million factory in Lewisport, Ky.

"I'm convinced you will hear our competitors continue to announce new capacity because it's a race," Constellium Chairman and CEO Pierre Vareille said today on a conference call with analysts.

Ford Motor Co., General Motors and Chrysler Group are among carmakers replacing an increasing amount of steel with aluminum to reduce weight and satisfy regulations that vehicles be more fuel-efficient.

The 17.5 million cars and trucks expected to be produced in the U.S. next year will contain 3.2 million metric tons of aluminum, 28 percent more than was used in the auto industry in 2012, consultant Ducker Worldwide said in a June report.

Constellium plans to boost mill capacity at Wise to more than 700,000 tons from 450,000 tons now. Constellium said buying Muscle Shoals, Alabama-based Wise will make it more competitive with rivals in the U.S., who have taken the lead in supplying domestic automakers.

"When we were discussing with the GMs, the Chryslers, the Fords of this world, we were not a domestic player," Vareille said. "Now we are a domestic player."

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