Aluminium might be one of the most abundant metals, comprising 8 per cent of the Earth’s crust, but it was discovered and isolated in its elemental form less than 200 years ago and its use only really took off in the second part of the 20th century.

Its low density, its ability to form strong alloys and its resistance to corrosion has seen it become one of the most versatile and widely used metals today.

The metal itself is predominantly found as an oxide, alumina (aluminium oxide, Al2O3) in nature. Alumina deposits that can be exploited commercially are mainly found in bauxite mineral ores.

Such bauxite deposits can be found in numerous countries around tropic and sub-tropic zones. Greece has some of the largest deposits in Europe, while Australia is the largest bauxite producer in the world by far. Other prominent producers are various Caribbean states, Brazil, India and China.

The story of the aluminium industry during the early 20th century was basically the story of multinationals trying to secure bauxite supplies for their alumina refineries. The known deposits at the time were situated in less developed parts of the world, often regions under colonial administration. The first step on the way to producing aluminium, converting bauxite to alumina, although energy-intensive and waste-generating, is relatively straightforward, especially if the bauxite ore used is soluble in caustic soda.

The second phase, the smelting phase, converting alumina to aluminium requires massive quantities of electricity, as the highly polar aluminium-oxygen bond is very difficult to break down. To get an idea of the quantity of electricity required, at times the Portland aluminium smelter consumes 10 per cent of Victoria’s generated electricity.

In such multi-step metallurgical processes, often the temptation by producers is to vertically-integrate by being involved in all steps of the production process as each step adds value.

Companies would rather export a ton of aluminium products than a ton of bauxite and earn more revenue.

And where does one situate an aluminium smelter? Obviously, wherever one can gain access to cheap electricity. That’s why Dubai and Bahrain have large aluminium plants, as they have access to inexpensive gas-fired power plants. Others like Norway and Canada have cheap hydroelectric power.

Greece is one of the few countries that can boast a vertically-integrated aluminium industry where the different processing stages are all located in close proximity – Boeotia, Central Greece. In fact, bauxite was discovered in Greece in the 1920s and by the onset of World War Two, Greece had become a significant bauxite producer and exporter.

The war had devastated the Greek economy and the recovery process had been prolonged by the immediate civil war that followed.

Meanwhile aluminium was seen as the ‘wonder metal’ of the 20th century; it embodied modernisation and was considered a strategic resource for both civilian and military industries.

Greek political parties of all persuasions were in agreement that Greece had to exploit its mineral wealth. The expectation was that a fully developed aluminium industry would spearhead the creation of an industrial base that would spurn opportunities and kick-start developments and value-add activities in other sectors of the economy.

This diversification would also raise Greece’s standard of living and reduce its reliance on agriculture.

In 1960, the Karamanlis government signed a contract with French firm Pechiney to build an integrated aluminium complex. In such cases, the foreign firm has a disproportionate advantage at the negotiating table. It has the global linkages, the technological know-how, provides most of the capital and has access to export markets.

Pechiney was able to extract scandalous below-cost electricity prices and thus put Greece on the map as an aluminium producer. This issue caused tremendous political friction in the 1960s.

It appears that the Karamanlis government was only too willing to make overly generous concessions to appease European capital as it set its sights on eventual EEC membership.

Greece became an associate member of the EEC in November 1962. The plant became operational in 1966 and virtually every government since, with the exception of the military junta, has clashed with Pechiney as they’ve tried to renegotiate electricity prices.

Over time Aluminium de Grèce, the Pechiney-controlled subsidiary, expanded its production capacity, employed around 2,000 people and its products constituted a significant part of Greek industrial exports.

However, the much anticipated industrial take-off of the Greek economy didn’t take place. At the beginning of the new millennium there was considerable consolidation that took place amongst global aluminium companies. Alcoa bought out many of its smaller rivals and eventually Pechiney fell prey to Alcan, the Canadian-based aluminium conglomerate. Alcan then began disposing of its non-core assets and Aluminium de Grèce was acquired by the Mytilineos Group, one of Greece’s leading industrial entities.

Since then, Mytilineos has been in constant renegotiation and litigation battles with ΔΕΗ (the Public Power Corporation) over the price of electricity.

Despite the difficulties caused by fluctuating global aluminium prices and increasing stockpiles, Aluminium de Grèce continues to remain viable in an industry not for the faint-hearted.

*Dr Nick Dallas will give a lecture on the Greek bauxite-aluminium industry on Thursday 11 September at 7.00 pm, at the Ithacan Philanthropic Society, Level 2, 329 Elizabeth Street, Melbourne as part of the GOCMV’s public Greek History and Culture seminar series.