The Big Blackout of the Venezuelan Aluminium Industry

Aluminium Industry Venezuelan Aluminium Industry

The Big Blackout of the Venezuelan Aluminium Industry

Venezuelan Aluminium Industry

“The power is blinking, isn’t it?” an employee at a bakery asks her co-workers. It’s 5:26 p.m. in Ciudad Guayana, cradle of the steel industry in Venezuela, and it’s the prelude of something tremendous for the region.

The previous day, March 6th, Nicolás Maduro visited the state-run company CVG Comsigua, old bastion of Guayana’s workers’ struggles, and for the thousandth time he repeated the unfulfilled promise of “recovering the basic industries”. He was just reacting; on March 5th, caretaker President Juan Guaidó met with union leaders from all over the country to intensify the protest. “Our greatest victory against imperialism is the boost of economic production on all companies in Guayana,” said Maduro to the empty cheering of employees set as accessories for the speech.

24 hours after Maduro’s visit, the nationwide blackout began. Ciudad Guayana seemed safe: “At least we have the Guri dam here,” said the locals, with a mixture of relief and astonishment for the national commotion. That night, Ciudad Guayana citizens went to bed thinking only of hyperinflation, shortages and the uncertainty of the new normal in Venezuela.

At 1:05 a.m., homes went dark, along with streets and the three bridges connecting the two sides of the city. The twilight reached even those factories that Maduro visited hours before.

The blackout lasted until 6:00 a.m. and, in those five hours, the last electrolytic cells still operating in the only two aluminium-processing companies in the country, 59 cells at Venalum and only 14 at Alcasa, went out.

Both companies were already at their minimum operational capacities, and they stopped working altogether on Friday, March 8th.

The genesis of an emporium

Inspired by curiosity and the postwar development fever, the civilian-military coalition that ruled Venezuela between 1945 and 1948 ordered the exploration south of the Orinoco river, to the country’s southeast. With the technology of the day, prospectors identified a mountain rich in iron ore. And that pleased them, and they saw it was good.

That mountain was very close to the Orinoco, which flows into the Atlantic Ocean, so it was perfect not just for extracting iron ore, but also for exporting it. After the installation of the transnational Orinoco Mining Company in 1949, they noticed that another river nearby, Caroní, could serve them for even greater goals; its extraordinary hydroelectric potential promised a scenario beyond extractivism, using the region’s comparative advantages to transform natural resources through cheap electric energy.

Then came the idea of a steel industry, although the wealth of the Guayana soil offered much more than that: important deposits of bauxite, the main source of aluminum in the world, were soon discovered at Los Pijiguaos, in Western Bolivar.

Along with steel company Sidor (Siderúrgica del Orinoco), created in 1964, the aluminium sector grew in parallel with the iron-steel sector. The foundation of Alcasa in 1957, Ferrominera Orinoco in 1975 and Venalum, in 1978, set the pillars of what would become a globally known reference on transforming natural resources into primary products. The concept of “Guayana’s basic industries” was born and, with it, a universe of opportunities for both regional and national development. The immense amount of energy that these industries required came from the Caroní river, specifically from the Guri hydroelectric complex, inaugurated in 1969.

But low-cost electricity, one of the main strengths of Guayana’s basic industries, turned into a flaw in times of revolution.

Water, electricity and aluminium

This is how an electrochemical aluminium reduction cell, the heart of an aluminium factory, works: within a metal structure about 15 mts. wide, an anode with a positive charge and a cathode with a negative charge exchange electrons to transform aluminium trioxide, or alumina. With the aid of an electric resistance that reaches temperatures above 900° C, aluminium atoms split from oxygen atoms. The aluminium, cleared of all chemical impurity, precipitates to the bottom of the recipient as liquid metal.

A cell works continuously for 1,800 hours, as the components of the chemical reaction are depleted. For every 24 hours of work, each cell consumes 25,000 kWh. Venalum has an installed capacity of 905 cells; Alcasa, whose technology is more outdated, has 596. Venalum’s fifth line alone consumed 4.5 kWh, equivalent to the monthly consumption of 90,000 homes, with a ratio of 1,500 kWh per month.

If a cell spends more than two hours without power, the electrochemical process within stops and the primary aluminium at the bottom of the cell starts solidifying, neutralizing the reduction device.

“El Niño is to blame!”

Basic industries were already affected by the replacement of qualified personnel for “people loyal to the process” and inadequate maintenance, but on December, 2009, Hugo Chávez’s government announced that 400 cells in CVG Venalum and 200 in CVG Alcasa would be shut down, as a way to save energy for the imminent drought of the following “year of El Niño”.

“El Niño is to blame!” Chávez insisted, actually concealing profound management failures.

Journalist Damián Prat says in his book “Guayana, el milagro al revés” that the situation didn’t take Chávez by surprise. In 2002, also a “year of El Niño” the drought did some damage, but the national electric system was still robust and the weather phenomenon didn’t affect power generation. In Venezuela, there’s a direct relation between drought and electricity: most of the generated power comes from four hydroelectric complexes in Guayana, Guri, Caruachi, Macagua I and Macagua II, which supply almost the entire country, including Guayana’s basic industries.

Prat says that government experts gave Chávez a study, recommending the increase of thermoelectric plants near Caracas, improving the thermoelectric plants along the coasts of Carabobo and Zulia, and building the Uribante Caparo hydroelectric complex in Tachira. A billionaire investment, but back then the country was riding the wave of the oil barrel at $120. The result: Termotuy and Termosucre were never built, Planta Centro and Termozulia I and II weren’t expanded, and the construction of the Uribante Caparo complex, scheduled for 2003, started 13 years later and is quite far from completion. “Chávez had to sacrifice something and he sacrificed Guayana’s basic industries,” says Prat, “to not reduce electricity output for Caracas, obviously for political reasons.”

The collapse of the aluminium sector is more than just another blow to Guayana’s already battered economy and industrial productivity. It also affects other two companies: CVG Bauxilum and CVG Carbonorca. The first is focused on extracting bauxite to turn it into alumina; the second, on producing carbon anodes for cells. “If an automobile assembly line needed primary aluminum, where could they buy it? Abroad,” Prat explains. “They have to import it. That increases production costs and, therefore, the product’s final cost.” Common citizens experience it every day when they try to buy a can of sardines produced in Venezuela and it’s too expensive; not because of the fish, but because of the imported steel the can is made of.

By 2013, there were some 100 aluminium smelting companies in Venezuela. According to the venezuelasite.com directory, only nine companies remain today, and only one of them, CVG Alucasa (Aluminio de Carabobo) belongs to the state. Damián Prat doesn’t think that the aluminium sector is already dead in Venezuela, but it’s certainly in a vegetative state.

Over 5,000 Venalum and Alcasa employees were dismissed. “It’s as if they’d dropped a bomb and destroyed all forms of life, everything is shut down, offices are in the dark, there’s a frightful silence,” wrote journalist María Ramírez Cabello after visiting the premises.

Meanwhile, in that bakery that experienced the outage a few days before, the owner orders employees to take care of the trays. “They’re made of aluminium and you can’t find them now. And if you do find them, they’re too expensive!”

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