Does smelting actually need a lot of labor? I'd imagine this process is very scalable, bauxite flows into the plan, into furnaces, into machines which create ingots or sheets, etc. Labor would mostly be at the input/output stage of unpackaging/packaging, and of running the factory machinery and management.
But this is not like manufacturing phones where labor = O(number of phones produced). Am I wrong? Why is aluminum production not almost purely capital intensive?
If so, it would suggest that the advantage of China isn't cheap labor costs, but either cheap energy, cheap regulations, or cheap currency.
Which really means Chinese aluminum needs to be taxed to price in the full costs of environmental damage. If for example, the aluminum is produced by carbon emissions, or just plain old soot and other pollution, the costs of this should be estimated and other countries which import Chinese aluminum should slap a tariff on it equal to those costs. They should also domestically tax carbon. Actually, I'd argue that you can't really tax carbon domestically unless you tax it internationally.
> But this is not like manufacturing phones where labor = O(number of phones produced). Am I wrong? Why is aluminum production not almost purely capital intensive?
You still need people to handle the machines, repair the machines, perform billing, HR, etc. You don't have giant automated aluminium factories devoid of people.
> If so, it would suggest that the advantage of China isn't cheap labor costs, but either cheap energy, cheap regulations, or cheap currency.
Yes. It is more the cheap energy/regulations but the labor savings isn't 0. Aluminum factories in the west regularly have 7-9 figure environmental problems.
There is also the fact that although direct labor may not be a large % almost everything needed to create and maintain the plant is produced by China with cheap labor (including exotic things like rare earth metals). This is the ole McDonalds econ effect (McDonalds owns their own farms etc..) of controlling production of all upstream things to provide better price and leverage.
Besides regulation there is also the fact that China has a government where eminent domain and relocation citizens to other homes is not a problem.
I don't think you can solve that by just putting an import tax on aluminum. What about aluminum produced with cleaner energy than coal? Would you want to ask what energy source they used? Would you make it depend on the country of origin? What about for example cars? Would you also tax them for the aluminum content? Depending on the origin of that aluminum? If not it seems like you would create a disadvantage for US car manufacturers having to use the more expensive domestic or taxed imported aluminum. Or airplanes? Maybe it doesn't matter as much as I imagine because aluminum is always only part of the costs but I am convinced it would not be a trivial thing to tax dirty aluminum.
I think this is just the direction that needs to happen. The manufacturing and mining countries have a strong disincentive to carbon taxation -- the first mover gets the "prize" of losing market share to their untaxed competitors. So they will make lots of populist noises periodically, but eventually not be effective at it. Australia got rid of its carbon tax, and even when it had it it compensated many of the major polluters to shield them from its effects. China announces "targets" that are generally a little worse than what was predicted to happen already -- carbon output peaking in 2030, etc. Canada will make lots of "progressive" noises now Trudeau is in but eventually they'll do little to harm the competitiveness of their resources industry.
If you're going to get carbon taxation, it needs to happen at consumption, because that's where you're not asking turkeys to vote for Christmas. Tax materials and products at an average rate for that product by default, but at a lower carbon-dependent rate if there is an independently verified audit trail for the environmental impact of its materials and manufacture. Effectively, a VAT or GST rate that depends on environmental impact.
I would just like to add that multiple concentrates from different locations are frequently blended before being smelted into a refined product, so, even more to your point...
But this is not like manufacturing phones where labor = O(number of phones produced). Am I wrong? Why is aluminum production not almost purely capital intensive?
If so, it would suggest that the advantage of China isn't cheap labor costs, but either cheap energy, cheap regulations, or cheap currency.
Which really means Chinese aluminum needs to be taxed to price in the full costs of environmental damage. If for example, the aluminum is produced by carbon emissions, or just plain old soot and other pollution, the costs of this should be estimated and other countries which import Chinese aluminum should slap a tariff on it equal to those costs. They should also domestically tax carbon. Actually, I'd argue that you can't really tax carbon domestically unless you tax it internationally.