A decision by Alcan Aluminium Ltd to reactivate 60,000 tonnes of productioncapacity at its Sebree, Kentucky smelter and 50,000 tonnes at its Lynemouthsmelter in Britain to meet rising demand has raised question over whetherother aluminium makers will follow suit.

Alcoa Australia Ltd [AAOA.CN], a joint venture of Alcoa Inc and WMC Ltd,earlier this month said it expects to return its two Australian smelters tofull capacity by year.

Alcoa Australia is 60 per cent owned by Alcoa and 39.25 per cent by WMC. Therest is in institutional hands. In total, Alcoa Inc expects to restart some209,000 tonnes of capacity shut in the mid-1990 in the US and Australia whenaluminium prices were soft.

Stepped up usage of the metal in automaking and more robust industrialactivity in Asia has helped soak up a world surplus, creating room for moreproduction, analysts said.

Investment group NM Rothschild & Sons forecasts growth in world aluminiumsupply to run at around three per cent this year.

Alcoa Australia's Portland smelter produced about 350,000 tonnes ofaluminium in the year to December 31, 40,000 tonnes below peak operatingcapacity. Its Point Henry smelter, with design capacity of 180,000 tonnes ayear, has been operating at a rate of around 160,000 tonnes a year. CapralAluminium Ltd's Kurri Kurri smelter near Sydney has been operating at asteady rate of 150,000 tonnes a year, constrained from any further increasesby limited availability of power contracts. Capral, which hopes to sell thesmelter to focus on aluminium fabrication and distribution, has reached onlyshort-term power supply agreements, so any rise in output in the near termis seen by analysts as remote.

"They are ekeing out as much as they can right now," said one. Theneighbouring Tomago smelter, a partnership of CSR Ltd, Pechiney SA and VAWAluminium AG, recently completed an upgrade, taking capacity 10 per centhigher to 440,000 tonnes a year. "They would like to build in morecapacity but also must deal with power availability," the analyst said.

Comalco Ltd has been running its Boyne Island and Bell Bay smelters inAustralia and Tiwai Point smelter in New Zealand at full speed for sometine, a company spokesman noted.

"We're already operating at full capacity," the spokesman said. Productionof 678,000 tonnes for Comalco last year was up four per cent on 1998, henoted. Alcan said the restarts are to meet increased customer demand andcompensate for the capacity shortfall resulting from the March 31 permanentclosure of its Isle-Maligne smelter in Canada's province of Quebec and theKinlochleven smelter in Britain at the end of June.

With those smelter closures, Alcan will have permanently closed 83,000tonnes of capacity by the end of 2000. Alcan said the idle potlines atSebree and Lynemouth will be restarted immediately for full operation byNovember.