Industrial Economies Case- Aluminum

Topics: Supply and demand, Cost, Aggregate demand Pages: 1 (252 words) Published: September 26, 2012
Discussion Questions for the Aluminum Case Group:
 
1. Conduct a S-C-P analysis for the Aluminum industry.  Is primary aluminum production industry an attractive(profitable) industry?  Why and why not. 2. Using information in the case and the data from the attached spreadsheet, construct the industry supply curve for primary aluminum.  Please note the marginal costs are used to derive the supply curve and be careful as to what cost items can be counted as “marginal” costs.   DO NOT use regressions to derive the supply curve. 3. At what rate do you expect the “primary” aluminum demand to grow in the next 5 years?  (Be sure not to confuse “total” aluminum demand with “primary” aluminum demand which is total demand less scrap production.) 4. With the demand and supply of primary aluminum, what price do you expect aluminum be in next 5 years?  10 years? 5. With the prices in mind, use cashflow analysis to calculate the NPV of the proposed Hillside smelter project. (You can find the interest rates of South Africa at that time from Internet and then choose a discount rate).  Should they go ahead and build the plant? 6. Are your conclusions sensitive to any assumptions you make?  What risks involved in the project.   7. Please write a group write-up of this case.  Detailed your recommendations, analysis and conclusions.  The write up should not exceed TWO pages (yes, you can add one more page) excluding all appendices.  You can attach all your analyses as appendices.        
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