Daniel Hill: Good morning everyone.

My name is Dan Hill.

I’m the Acting Undersecretary for the Bureau of Industry and Security.

And I’d like to welcome you to today’s public hearing on the Bureau of Industry and Security’s Section 232 Investigation on the effect of aluminum imports on the US national security.

While we wait for the secretary to join us and to kick the session off, I’d like to just review a few rules of the road for our hearing today.

There are 31 speakers – 32 speakers altogether.

And we wish them to have the opportunity to talk to us today about the issues facing the industry from imports.

If there is anybody here today who wish to testify but is unable to because of time or others, I do want to tell you that the – we are still accepting written comments, and we will accept those through midnight tomorrow, June 23, 2017.

Those who have elected to testify are sitting down front here, and they will be called to the podium by Matthew Borman, our assistant secretary for Export Administration.

The order of speakers was provided to each speaker when you checked in, and Matt will be calling you in that order.

Speakers will be asked to limit their testimony to five minutes.

A timekeeper here behind me will watch the clock very closely, and he will hold up signs when you’re getting to the end of your five minutes.

Then he’ll hold up another sign when you’re at your five minutes.

Then he holds up a demolition sign at the end of that.

These proceedings are being recorded for us professionally, and a transcript will be posted on our website.

When you come to the podium please identify yourself and the organization that you represent.

And remember again to watch the timekeeper.

We will not be taking questions from those testifying or from the audience during the hearing.

However the panel as we listen to the presentations this morning may take clarifications on specific points that you may raise.

In a few minutes after we hear from our secretary, we will begin with our first speaker, State Representative Jim Gooch from the Kentucky House of Representatives.

The secretary is in the round, and we expect him momentarily.

Just so you know, we’re whispering.

The first time will be the security officers will show up so there’s no (unintelligible) right now.

Matthew Borman: While we’re waiting for the secretary I think we’ll have the panelists introduce themselves so you know who’s listening to you.

Can we start down at the far end?

Lee Bray: I’m Lee Bray, a mineral commodity specialist with the US Geological Survey.

Robert Reed: I’m Bob Reed.

I’m the director of the Industrial Assessments Office with the Department of Defense for the Manufacturing and Industrial Base Policy Office.

(Wyatt Lowe): (Wyatt Lowe) with the Defense and Logistics Agency, Strategic Materials.

Gary Stanley: Good morning.

I am Gary Stanley.

I’m the Director of the Office of Materials Industries and the International Trade Administration here at the Department of Commerce.

Karen Swasey: I’m Karen Swasey.

I’m an industry analyst with the Bureau of Industry and Security.

(Peter Clafen): I’m (Peter Clafen), Senior Counsel on the Office of Chief Counsel for Industry and Security here at Commerce.

Matthew Borman: And Matt Borman, the Assistant Secretary for Export Administration here at the Department of Commerce, Bureau of Industry and Security.

Daniel Hill: Good morning again.

Welcome.

My name is Dan Hill.

I’m the Acting Undersecretary for the Bureau of Industry and Security, and I’d like to welcome everyone to today’s public hearing on the Bureau of Industry and Security’s 232 Investigation on the effect of aluminum imports on US national security.

It is my honor and pleasure this morning to introduce our boss, Commerce Secretary Wilbur Ross.

The president has asked Secretary Ross to be the principle voice for business in his administration.

Daily the secretary ensures that US entrepreneurs and businesses have the tools they need to create jobs and economic opportunity throughout this great country of ours.

Secretary Ross is the former Chairman and Chief Strategy Officer of the WL Ross and Company, LLC, and has over 55 years of investment banking and private equity experience.

Mr. Ross has restructured over $400 billion of assets, and has been chairman or lead director of more than 100 companies operating in more than 20 countries.

Please join me now in giving a warm welcome to our secretary, Secretary Wilbur Ross.

Wilbur Ross: Well thank you Dan for that very kind invitation, and good morning to everyone.

I’d like also to thank our colleagues from the Bureau of Industry and Security, from the ITA, the Department of Defense, and the US Geological Survey for being here today.

This forum will focus on whether imports of aluminum threaten or impair our national security and military and economic security.

Aluminum is critical for US national defense, whether used in our Air Force jets, Navy warships or Army ground vehicles.

US imports of aluminum increased 18% in 2016, compared with those in 2015, while at the same time US production decreased.

Eight US based smelters have either closed or curbed production since 2015.

Only two US smelters remain fully operational in the United States today.

And only one US smelter produces the aerospace grade aluminum needed for many defense applications.

This investigation is being conducted in light of the large volumes of excess aluminum capacity and production.

Much of this excess aluminum results from foreign government subsidies and other unfair practices that in turn distort US and global aluminum markets.

Our investigation will consider several factors including the domestic production needed for our projected national defense and critical infrastructure requirements; second, the domestic industry’s capacity to meet those requirements; third, the related human and material resources needed; fourth, the importation of goods in terms of their quantities and use; fifth, the close relationship of national economic welfare to national security; sixth, the loss of skills in investment, substantial unemployment and a decrease in government revenue; seventh, the impact of foreign competition on specific domestic industry; and eight, the impact of displacements of a domestic product by excess imports.

This administration will stand up for the security of American workers, American businesses, and American families.

And we will conduct this investigation thoroughly and expeditiously to determine if there is a threat to our national security.

There are 32 panelists today, each giving five minutes of testimony before taking questions from the panel up here.

I trust you will find the testimony interesting and informative.

We are streaming this hearing online, and also are providing a transcript for later review.

Thank you for joining us here at the Department of Commerce.

I look forward to an informative hearing.

Matthew Borman: Thank you Mr. Secretary, and we are now ready for our first witness, Representative Gooch.

Please come on up.

Jim Gooch: Good morning.

I’m Representative Jim Gooch of the Kentucky House of Representatives, where I chair the standing Committee on Natural Resources and Energy.

I want to thank President Trump and Secretary Ross for their strong leadership on trade, and for finally recognizing what is at stake if we continue to allow imports to erode critical American industries.

Since 1995 I’ve had the opportunity of representing Kentucky’s 12th District, home to Century Aluminum’s Sebree smelter and the skilled, hard working men and women who make it run.

I like to call these men and women and others like them the backbone of America.

They make the raw materials like aluminum that we need to keep our economy and our communities strong.

And they’re vital to our ability to fight and win when our national security is at stake.

Unfortunately these hard working Americans, the aluminum industry and American national security are facing a dire threat because of decisions that bureaucrats as far away as China have made.

You’ll hear a lot today about how the Chinese government has created a bloated industry with no competitive advantage.

You will hear about how this bloated industry has forced other countries to flood US markets with their imports.

And you will hear about how aluminum is critical for protecting American soldiers on the battle field.

But I would like to focus on a different aspect of your investigation.

Specifically it is impossible to overstate how important these aluminum plants are to our economy and our local communities.

I know this because I see it first hand, day in and day out.

Speaking just for my district, Century Sebree does a lot more than make aluminum for armor and airplanes.

The smelter supports about 500 jobs that pays $35 million in taxable wages.

Those wages generate almost $2 million in state income tax.

The plant pays another 1.5 million in state sales tax, making it a critical source of revenue for our state and local budgets.

And this is just the direct economic impact of the smelter.

The plant also purchases 41 million in goods and services from regional vendors who employ their own workers, pay their own taxes, and so on.

And even as this industry struggles, Century Sebree continues to make vital contributions to local charities and schools in our community that our community depends on.

I don’t know how we would replace them if the smelter shuts down.

I know that other communities that still rely on the few remaining US aluminum smelters face the same uncertain future.

Once these facilities are shut down, they are usually gone for good.

And the loss to local employment, tax revenue, technology, skills and expertise are permanent.

Unfortunately we are already at the tipping point for what’s left of this great industry.

I urge you to take action to allow our aluminum producers to pull themselves back from the brink, and to continue playing their important roles in our national defense, our economy and our communities.

Again I want to express my appreciation for the efforts and attention of President Trump, Secretary Ross and their staff for this vital part of the American economy and America’s national defense.

And I thank you for the opportunity to appear before you this morning.

Thank you.

Wilbur Ross: Thank you very much Mr. Congressman.

Are there questions from the panel for the congressman?

We thank you for your testimony.

Matthew Borman: Next the representative from the People’s Republic of China.

Man: Good morning Secretary Ross and members of the panel.

My name is (unintelligible) from the Ministry of Commerce of China.

On behalf of my ministry and the Chinese industry, I wish to express the following views.

First, US national security requirements for aluminum are entirely and safely supplied by US domestic (unintelligible).

Furthermore the amount of aluminum required by national defense is small, a (unintelligible) less than 2% of the US total domestic consumption of aluminum.

Second, the US aluminum industry is strong and enjoying a clear competitive advantage.

This insures a continued and reliable supply of US domestic aluminum.

For many years the US industry has enhanced its position by occurring significant and high-quality boxes in Australia, Brazil and other countries.

The US economy has shifted their primary aluminum production to (unintelligible) region such as (unintelligible) and the Middle East.

Furthermore US aluminum producers (unintelligible) the most up to date technology and expertise.

They maintain a dominant position in manufacturing high precision aluminum seats and plates used for vehicles and aircraft.

Third, (unintelligible) the US domestic economy and does not impair national security.

The United States exports a significant amount of high value aluminum product in 2016.

The total value of US exports of aluminum semi-products amounted to 6.8 billion US dollars, creating 1.4 billion US dollars trade surplus.

In addition the US imports boxes, aluminum and the primary aluminum (unintelligible) common aluminum semi-products from many different countries.

Aluminum products import from China, a general product with civilian uses such as trailers, packaging, roofing, road signs and consumer durables.

None of these products implicate national security.

Finally, the WTO legal framework does not permit members to impose (unintelligible) in locations of national security exemption.

Many members and interested parties have reasons – have serious concerns that trade restriction in this case may favor similar applications by other members.

We believe that unilateral trade restrictions are not conducive to solving the problem of the US and global aluminum industry.

Global overcapacity is the result of manufacturers including (unintelligible) in global economic growth and sluggish demand.

The solutions to these challenges entail global joint efforts.

The solution to this – the government of China has proactively undertaken many (unintelligible) to eliminate excess domestic aluminum production capacity and to encourage broader application of aluminum products.

We appeal today to all global stakeholders to join hands in addressing the industry’s challenges (unintelligible) and constructive engagement.

In conclusion we believe that imported aluminum products do not impair US national security or the economy.

We hope that US Department of Commerce will carry on this investigation cautiously and (unintelligible) and refrain from taking inappropriate (unintelligible) on imported aluminum products.

To this end, the US government is encouraged to conduct these proceedings in a balanced and transparent manner, and consider a broader range of global stakeholders’ opinions, including the Chinese Aluminum Industry Association and the individual companies who were not selected at this public hearing.

Thank you for your attention.

William Ross: Thank you very much for that testimony.

Does anyone on the panel have questions for the representative?

Matthew Borman: I do have a question.

You mentioned that the government of China has proactively undertaken many measures to eliminate excess domestic oil and production capacity.

Could you give some examples of those proactive steps the government has taken and what the results of that action has been so far?

Man: Yes.

We will submit recommendations report to the panel…

Matthew Borman: Okay.

Man: …after this hearing.

Matthew Borman: Thank you.

((Crosstalk))

William Ross: Are there any other questions?

Matthew Borman: Thank you.

We’re ready for our next speaker from the United Arab Emeritus.

(Falavel Crasey): Secretary Ross, esteemed panelists, good morning.

My name is (Falavel Crasey), and I am appearing here today as part of the Trade and Commercial Office of the Embassy of the United Arab Emirates on behalf of the Ministry of Economy’s submission recently.

I appreciate the opportunity to participate in this hearing, and will use the few minutes allotted to me today to emphasize several points developed more fully in our written submission.

The fundamental point I wish to convey today is that the UAE’s exports of primary aluminum to the United States are one part of a robust dynamic and positive relationship between our two countries.

The UAE exports only primary aluminum which contributes significantly to the growing downstream US aluminum sector.

From the UAE’s perspective, this trading relationship enhances US economic and security interests.

Please allow me to explain why.

First, due to its fair trade policies, economic growth and history of economic partnership with the US, the UAE is the largest export market for US origined goods in the Middle East and North Africa.

Over the past decade US exports to the UAE grew by 118%, with the US enjoying a $19 billion trade surplus with the UAE in 2016.

This bilateral trade surplus which benefits many US manufacturing industries includes growing US exports of aircraft, base systems, satellites, electrical machinery and electronics, as well as vehicles, nuclear energy technology and many other higher value manufactured items.

According to the UN contract data – Comtrade data, sorry, as detailed in our original submission, US exports to the UAE are nine times higher by value than UAE exports to the US.

Aluminum accounts for 27% of the UAE’s exports to the United States, but only 3% of the value of US exports to the UAE.

Moreover, some of the high value US exports to the United States such as (unintelligible) equipment are purchased by our aluminum industry.

The large US trade surplus with the UAE also reflect the UAE’s purchases of US made military hardware and technology.

And according to the Department’s International Trade Administration, the UAE offers vast potential for US exporters.

The UAE accounted for 6.4% of total US defense exports in 2015, and has one of the largest projected growth rates for US defense exports in the world.

Second, this robust bilateral trade relationship is accompanied by strong bilateral investment size.

In fact over 1500 US firms have invested in the UAE, many of whom employ the UAE as a hub for their regional operations.

Conversely and according to data from Select USA, the UAE investments in the US are around $30 billion and support some of the most innovative US manufacturing industries.

To cite just one major example, the UAE is 100% invested in GLOBALFOUNDRIES, a manufacturer of advanced semiconductors in New York State.

And DOD is a customer of GLOBALFOUNDRIES as well on avionics and satellite systems for their semiconductors.

Looking at the full picture of the economic ties between our two countries, the UAE has a trade relationship which supports jobs in every single US state.

Aluminum supplied by the UAE industry to the US, a value-added manufacturer around the country, is part of this robust and mutually beneficial economic relationship.

Third, the bilateral trade and investment size I just summarized are further bolstered by US UAE corporation on a wide range of strategic and security initiatives.

As categorized by the US Department of State, the US and the UAE enjoy strong bilateral cooperation on a full range of issues including defense, non-proliferation, trade, law enforcement, energy policy, cultural exchange while working together to promote peace and security, support economic growth, and improve educational opportunities in the region and around the world.

In the security arena the UAE is one of the US’s critical partners in the region, providing essential support for US troops, aircraft and vessels operating in the Middle East.

Indeed, Secretary of Defense Mattis was in the UAE just last month to finalize and update the Defense Cooperation Agreement.

During the past 25 years the US and the UAE’s military forces have worked together on six military coalition actions, including the first Gulf War, Kosovo, Afghanistan, Libya and recent operations with terror in Iraq.

US UAE strategic operation extends to many other areas including counter terrorism, anti-money laundering enforcement and non-nuclear and nuclear nonproliferation.

This is the mutually beneficial context for UAE aluminum exports to the United States.

Finally I want to briefly mention the connection between this investigation and the rules based International Trading System that the United States has worked so hard to promote, which has helped make – helped so much in spearing global economic growth.

As the Department evaluates possible import restrictive measures in this investigation, I would respectfully ask it to consider compatibility of such measures with the WTO mutually agreed goals, rules on when, how and under what conditions WTO members may lawfully restrict trade.

Again thank you for the opportunity to appear before you today.

I hope my comments are useful as the Department formulates its findings and recommendations in this investigation.

Wilbur Ross: Well thank you for that thoughtful presentation.

Are there any questions from the members of the panel?

Thank you.

(Falavel Crasey): Thank you sir.

Matthew Borman: Our next speaker is a representative from the Trade Mission at the Russian Federation.

(Uri Signi): Good morning.

My name is (Uri Signi).

I am Deputy (unintelligible) representative for the trade representation of the Russian Federation in (unintelligible).

The trade representation of the Russian Federation in (unintelligible) on behalf of the Ministry of Economic Development of the Russian Federation expresses its gratitude to the US Department of Commerce for the opportunity to take part in this public hearing.

We would like to present briefly our comments regarding Section 232 Investigation initiated by the US Department of Commerce to the tentative effect of aluminum imports on American national security.

Based on the principle that through our broad and narrow interpretation of the notion of national security, we are of the position that under either international interpretation Russian imports do not and cannot threaten to impair your national security.

We would like to know that Russian supplies do not rely on fair trade practices.

Reliable and competitive supplies can operate fairly in the US and global market in the market condition.

In 2002 Russia was recognized as a market economy country by the USA and the European Union.

And since 2012 Russia has been a (unintelligible) member.

Importantly Russian aluminum industry is completely private owned.

The Russian government has never granted specific export subsidies or provided unfair financial contribution to Russian aluminum on a (unintelligible) market expansion.

Aluminum is an exchange trade commodity, and global market prices for aluminum (unintelligible) by the London Market Exchange on the basis of global supply and demand.

We believe that the Department of Commerce should substantially narrow their approach in this investigation and admit that the aluminum imports from Russia cannot harm the US national security.

Imports from Russia were not the cause of smelter closures in the USA.

The main reason for such closures are high energy costs, high labor costs, the growth of secondary aluminum products production.

Any restrictive matters against foreign suppliers of aluminum from market economies cannot be justified and will only harm the America aluminum industry.

I would like to emphasize that resulting (unintelligible).

There would be a massive shortage of aluminum raw materials required in the US market by all sectors of the aluminum industry.

Importantly it should be noted that the Russian aluminum interests are not supplied directly for any US military purposes.

So there is no any dependency of the American national security on the supplies of aluminum from Russia.

We are convinced that Russian imports do not impair the capability of American industry.

This is despite the defense needs of the country.

The available (unintelligible) National Defense requirements for aluminum products are relatively low and can be (unintelligible) US domestic industry.

On the contrary the availability of imports and raw aluminum from Russia enables continues further development of high value added aluminum production in the USA which drives the American economy development and allows the aluminum industry contribute about 1% of the US gross domestic product according to the Aluminum Association data.

But there is no mention above.

We believe that there is no need for the position of restraint of aluminum imports from Russia.

Moreover there is no threat of damage to the national security from Russian aluminum imports, and a restriction would cause injury to the wide range of US direct and indirect consumers bringing significant effect to the economy development.

We believe that the trade in aluminum products between US and Russia is mutually beneficial, and it should be supported and developed.

Thank you for your attention.

Wilbur Ross: Thank you very much.

Are there any questions from the panel?

Matthew Borman: Does the government of Russia have any specific proposals to address the global oversupply, the overcapacity issue?

(Uri Signi): I’m sorry, I’m not (unintelligible) answer this question.

Matthew Borman: Okay.

Thank you.

Wilbur Ross: Are there any other questions?

Thank you for your testimony.

Matthew Borman: The next speaker from the European Aluminum Association.

(Gar Gurtz): Good morning.

Secretary, distinguished members of the panel, I’m very honored to be invited to participate in this very important meeting.

My name is (Gar Gurtz).

I’m representing the Director General of the European Aluminum Industry from upstream to downstream, recycling and reproduction (unintelligible) with more than 80 members with about 600 clients in 30 countries, a considerable number for members of production facilities (unintelligible).

European Aluminum shares the concerns of the US government regarding the significant Chinese aluminum overcapacity and its impact on the US and European industries despite the healthy demand for aluminum worldwide.

We, the European industry, believe that addressing the root causes of this problem requires continued joint efforts of the US, Canada and Europe.

Within the framework of the current investigation, we urge the US administration to take into account the following elements.

First, imports of aluminum products from Europe in view of both the quantity and characteristics do not constitute a threat to your national security within the meaning of your statute.

Although the percentage of US imports of aluminum has increased in the past years, the percentage originating from Europe has remained stable over the past decade.

Europe accounts for a relatively modest part of US imports, and supplies specialty high value-added products to US consumers.

The vast majorities of European imports have little to no link to US national security, but are largely used in commercial applications.

In other words, the US is not dependent on European imports for its national security requirements including national defense.

Further, the European Aluminum industry truly functions on the market economy conditions, and does not suffer from (unintelligible) government ownership like (unintelligible).

Finally due to the long lasting military (unintelligible) of the US and a fundamental player within NATO tonight.

Under these circumstances it’s clear that European imports do not threaten to impair the capability of US domestic industry to satisfy national security requirements.

We call your government to refrain from targeting European imports with any potential measures associated with this Section 232 Investigation.

My second point is that the American and European aluminum industries are strongly interlinked.

We are truly united in our day to day business.

Demand for aluminum products is global, and supply is more and more structured globally not regionally.

Approximately 50 multinationals are members of both European Aluminum and the Aluminum Association, and supply daily a vast majority of the entire aluminum value chain on both sides of the Atlantic.

Together they own approximately 80 production and manufacturing facilities in Europe and 75 in the US, employing a large number of American workers.

These companies constitute trans-Atlantic ecosystem.

Weakening the European side of that value chain would affect the US (unintelligible).

This would also impact innovation and research and development, which are essential for the development of advanced aluminum manufacturing and application.

Intercompany shipments are very commonplace for these companies, and measures would also not be in the interest of your consumers who could suffer the first consequences in terms of material use, product quality material availability and increased pricing.

Third, let’s talk about the nature of the major threat we are all facing.

You will understand what I mean when I say that in our struggle too, we are united.

During my presentation to the USAPC on the true underlying problem of Chinese overcapacity, we testified together with many of the parties in the room here today about the importance of having a global solution to this unsustainable global risk The ongoing cooperation at G7 and G20 (unintelligible) to address the root causes of the structural (unintelligible).

This requires continued joint efforts between the US, Europe and other likeminded governments.

Moreover we will continue to watch governments globally to address the effects of excess capacity on prices and quantities with traditional trade instruments including through the WTO.

The conclusion is clear.

Continued joint efforts between the US and Europe are necessary, detecting the root causes of the global excess capacity and to secure balance in the US and European aluminum markets.

We are concerned that restrictive actions based on the current 232 Investigation will not provide the lasting solution needed by our markets, and may have unintended negative consequences for integrated aluminum supply chains.

In any event European aluminum should not be the subject of proposed measures under the Section 232 Investigation since they do not represent a threat to US national security.

(Unintelligible) European aluminum remains open to continue to cooperate in this investigation for the interest of all of our members, with particular interest in those that add value to our economies and societies on both sides of the Atlantic.

Thank you very much.

Wilbur Ross: Thank you for your testimony.

Does anyone on the panel have questions?

Matthew Borman: Does the European Aluminum Association have specific proposals on how to deal with the global overcapacity issue?

(Gar Gurtz): Yes.

We believe that the joint activities as mentioned with regards to a global solution may be the best solution for the whole industry.

We have an industry which is in growing demand, and from that perspective we should be able to develop this industry in a thoughtful manner, playing with the same rules everywhere which is today not the case.

Matthew Borman: Thank you.

We’re ready for our next speaker, Mr. (Scott).

Robert Scott: Good morning.

My name is Robert E. Scott.

I’m a senior economist with the Economic Policy Institute.

Thanks for holding this hearing.

Imports threaten the entire domestic aluminum industry, which is today hanging on only by a thread.

The threat is driven by the growth of excessive capacity and overproduction in China.

Chinese primary aluminum production capacity has increased by nearly 1500% between 2000 and 2017.

And China is responsible for 82% of the total increase in global aluminum capacity in this period.

This growth has been fueled by massive government subsidies and other market distorting practices.

Chinese over capacity has stressed global aluminum prices, transmitting injury directly to the domestic producers.

Aluminum is a global commodity, and prices are primarily driven by total global supply and demand, regardless of where aluminum is produced, sold or stored.

The US aluminum market effectively imports the adverse price and volume effects of China’s excess capacity and production via changes in the LME.

Collapsing prices have decimated US primary aluminum production, capacity and employment.

The LME market price of aluminum fell 39% between 2007 and 2016.

I would note anecdotally that over this time the price of a six pack did not decline by 40% .

In an industry with high fixed costs and most domestic aluminum producers have not survived this prolonged steady price collapse.

Since 2000, 18 of 23 domestic smelters have shut down, and more than 13,000 good domestic production jobs have disappeared.

Despite a slight recovery in prices in early 2017, US primary aluminum producers are barely surviving.

The threat to US national security posed by aluminum imports is significant.

The domestic industry is losing its ability to develop and supply products for US defense and critical infrastructure applications.

Instead the downstream goes producers becoming increasingly dependent on unreliable sources of imports in the Middle East, Russia and elsewhere.

If current trends persist, in time of war or other national emergency, the US would find itself dependent on unstable import supplies.

For these reasons it is critical that Section 232 relief is brought.

Specifically relief should be structured in a manner that allows as much primary aluminum production as possible to restart in order to maintain critical aluminum capabilities and prevent reliance on unstable supply.

Moreover relief must account for the fact that because so much US production has been shut down due to China’s market distorting practices, some imports are needed in the US market.

As such, a contiguous source of stable supply, Canada should be excluded from relief while (unintelligible) across the board restrictions on imports of both primary and downstream aluminum products.

According to market reports, the US consumed approximately 5.3 million tons of primary aluminum in 2016.

Nearly 80% of that consumption was serviced by imports, much of that from Canada.

Less than a million tons were supplied by US producers.

Because aluminum is a global commodity, excluding Canada from relief would likely result in virtually all of Canada’s available supply serving the US market.

Market analysts estimate that Canada possesses approximately 3.3 million tons of capacity.

The remaining available US capacity is approximately 1.8 million tons.

Consequently both Canada and US producers could service virtually the entire US market.

Therefore if US production is to restart, excluding any other import sources from the relief would undermine Section 232 relief to the point where US industry would see virtually no benefits.

Consequently if the administration is contemplating a tariff rate quota, the quota portion on other import sources should be extremely small, and can be phased down to a very small or de minimus level over six to nine months as US production restarts the need for non-Canadian imports is eliminated.

Moreover, relief must be predicated on adjusting for China’s attempt to capture control of the entire value chain.

Chinese industrial policy promotes downstream production in exports through the use of massive production subsidies and an export tax on primary aluminum designed to channel cheap inputs into manufacturing downstream aluminum products.

Chinese exports of downstream products have soared, taking market share away from domestic producers elsewhere and reducing demand for primary aluminum outside of China.

Thus it is critical this Section 232 relief is broad and also encompasses relief for downstream from producers of aluminum products.

Downstream producers also manufacture products for US military and critical infrastructure application.

In conclusion, for these reasons I recommend that the Commerce Department find that aluminum imports are threatening to impair national security and critical national infrastructure, and recommend that the president authorize trade relief in the form of tariffs covering all aluminum imports and HDS Chapter 76 excluding imports from Canada.

Thank you.

Matthew Borman: Thank you.

Any questions from the panel?

Thank you so much.

Robert Scott: Thank you.

Matthew Borman: Our next speaker, Mr. Bless.

Michael Bless: Good morning.

I’m Michael Bless, President and CEO of Century Aluminum Company.

On behalf of my 1800 colleagues, I’d like to thank you for the opportunity to be here today with you.

Century is the largest remaining producer of primary aluminum in the US.

We’ve got three smelters, two in Kentucky and one in South Carolina.

Our smelters produce both standard purity and high purity primary aluminum used in US military and critical infrastructure applications.

We are strongly committed to producing the highest quality aluminum products in the US for the US market.

Our ability to continue to doing so is at risk.

This investigation comes at a vital time.

The domestic industry is in danger of completely disappearing, as you’ve heard.

In 2000 the US was one of the largest producers of primary metal in the world.

There were 23 smelters in this country.

Today there are only five, and of these, as you’ve heard, only two are running at full capacity.

In just the last four years employment and production have fallen nearly 60%.

This statistic alone highlights precisely why it is a matter of national security to maintain what is left of this industry.

Aluminum pricing is transparent and efficient, reflecting total global supply and demand.

Since 2011 prices have crashed, and the US industry has seen several of its remaining smelters shuttered.

Neither a decline in demand nor higher costs explain this drop.

In fact over this time demand has grown significantly and energy costs in the United States have declined.

This should have been a healthy period for America’s smelters.

Instead prices have collapsed due to ever expanding over production led by state owned and state invested enterprises inside and outside China.

Market principles simply do not apply in China.

China has no natural comparative advantage.

Its smelters are amongst the highest cost producers in the world.

They lose money yet continue to expand.

Capacity in China has increased by nearly 1500% from 2000 to 2015.

During that same period smelters have closed across the US from Washington State to West Virginia.

China’s system incentivizes further downstream over production.

Since 2000 Chinese exports of downstream products to the US have increased by over 10,000%.

The surge in Chinese downstream exports further displaces additional US primary aluminum production.

Thus it is vital in our opinion that broad, comprehensive relief benefit the entire value chain.

As China drove metal prices down, US production collapsed, and imports from the rest of the world have surged into the United States.

Since 2012 imports from non-Canadian sources are up over 95% while US production is down over 60% as you’ve heard.

Because our aluminum is priced on a global exchange, the LME, these imports further transmit the Chinese price affects to the US.

US producers cannot restart production with these large volumes of low priced aluminum imports from the rest of the world in the market.

So much of our production is collapsed that we are on the verge of losing the ability to produce all aluminum, not just high purity.

And once a smelter shuts, it rarely reopens.

We will then be entirely dependent on imports from outside the US, some from even unstable and hostile sources.

We need relief in order to insure the US industry is not lost forever.

Before I discuss how, I’d like to speak briefly about high purity production.

High purity aluminum is used extensively in the defense industry, from aircraft to armored plate.

High purity metal can only be produced in large commercial quantities at smelters like ours in Hawesville, Kentucky.

There are other processes by which high purity aluminum is refined further.

These methods cannot produce large commercial quantities of high purity, and currently only Japan and China employ these methods.

Consequently this is not a viable substitute for high purity aluminum we produce.

Recently we suffered from a significant surge in high purity aluminum from Dubai at prices well below ours.

Some of our customers even testified in other settings that they had switched sources due to concerns over the US industry’s long-term viability.

As a result earlier this year we were forced to cease all high purity production.

Losing this volume jeopardizes our ability to properly train our workers to continue this production.

This production can be restarted, but only if imports are adjusted.

It is vital however that we maintain the capacity to product not just high purity in the US, but all primary aluminum.

Primary aluminum is a core input for such critical infrastructure as transportation, urban centers, energy transmission and defense.

We at Century recognize that imports are a necessary part of the US supply chain.

It is not our position that the US can or should be totally self-sufficient.

However the status quo is unsustainable.

We believe that other than Canada, all imports must be adjusted.

Canada is the largest exporter of prime metal to the US and a stable source of supply.

Therefore to adjust prices to reasonable levels, relief must be applied to all non-Canadian import sources.

Excluding Canada from relief will cause virtually all Canadian supply to shift to the US.

Along with remaining US capacity that can be restarted quickly, there is enough stable North American supply to service nearly all North American demand.

We believe a significant tariff on all non-Canadian import sources will cause the appropriate adjustment.

These non-Canadian import sources have supplied from long distances.

Excluding additional countries beyond Canada from the relief would make any relief ineffective.

By adjusting imports through this investigation, the administration could preserve what is left of this industry while addressing the root cause of the problem, China’s excess production and capacity through the WTO process.

But without real relief in this proceeding, the nation’s security including its critical infrastructure is at risk.

And we thank you very much for your time.

Man: Thank you.

You stated that the surge in Chinese semi-finished exports for this (unintelligible) additional U.S. primary aluminum production.

Can you elaborate on that a little bit please?

Michael Bless: Yes certainly.

So that production would have otherwise been served by you as primary production that would have been producing.

I would like to note there is upwards of a million tons we believe much of which that could be restarted to service that downstream demand if we had a rationally traded market.

Man: Thank you.

Another other questions for the panel?

Thank you.

Man: Thank you so much.

Man: Our next speaker, Mr. Lapides.

John Lapides: Good morning.

Mr. Secretary, members of the Commerce Department and other distinguished panelists and guests.

My name is John Lapides and I am from United Aluminum Corporation North Haven, Connecticut.

I am the President of fourth generation family owned rolling mill in North Haven, Connecticut.

I have worked at United Aluminum since my graduation from Stanford Business School in 1977 and I have served as president for 27 years.

United was founded by my great grandfather in 1891 and Harris was an immigrant from Russia.

My grandfather Louis bought the first rolling mill in 1915.

My father Robert returned to United after serving as Captain of two destroyers in World War II and later served at the Pentagon during the Korean conflict.

My father became the company’s second president on the death of my great grandfather Harris.

Originally named United Smelting and Aluminum Company, Inc.

United began rolling over 100 years ago.

The company was a founding member of the aluminum association in 1933 along with Alcoa and Reynolds Aluminum.

My points are brief.

First, the North American supply chain is tightly integrated and Canadian smelters are critical to the supply of slabs used for rolling.

Second, Chinese overcapacity has caused low world prices and has already significantly impacted U.S. smelting capacity causing numerous curtailments and closures.

United Aluminum is concerned about the supply of high purity aluminum.

Third, Chinese overcapacity and subsidized pricing in rolled products threatens the viability of U.S. rolling mills.

In addition, the imbalance of tariff rates between the U.S. and China and most other major trading countries disadvantages U.S. producers.

China imposes a 10% tariff on imports and at the same time incentivizes export of roll product with a 17% VAT rebate.

Europe and the U.K. impose a 7.5% tariff on imports of coil including the freight cost while the U.S. only imposes a 3% duty on imports.

Combined with the weak Euro, the benefit to the Northern EU countries is significant.

Fourth, Chinese subsidized pricing of end use products threaten the entire U.S. downstream manufacturing base.

The loss of know-how, capability and capacity and end use markets will continue to harm our readiness and our national security.

When we need it will be able to build it?

And will we be able to build it in time?

China has unfairly exported not only their products but also their unemployment, their pollution and potential social unrest.

Fifth, the U.S. is uncompetitive on tax rates, vocational training, competitive truck weights and freight and commuter rail capability.

We need to address those issues as well.

Last, I would suggest the following remedies.

First, impose a tariff on Chinese (unintelligible) coil but also in addition, impose a tariff on Chinese aluminum content in any form to provide a disincentive for Chinese dumping and end use markets.

Second, police interference by sovereign states and foreign exchange markets prevent currency manipulation benefiting those countries.

Third, eliminate unbalanced tariffs and non-tariff barriers which harm U.S. exports in China and the Euro zone.

Europe I might note has a 7.5% duty on Chinese imports of coil.

And very little coil is actually imported into the Euro zone.

So it is effective.

In closing, with a trade situation of what it is we can’t make America great again by being totally dependent on other countries.

On behalf of American workers and companies that can invest in the United States I thank you.

Man: Thank you.

Any questions from the panel?

Thank you so much.

Man: Thank you.

Man: Our next speaker, Mr. Adams.

John Adams: Good morning Mr. Secretary and distinguished panelists.

I am John Adams, President of Guardian Six LLC and retired brigadier general of the United States Army.

There is no doubt in my mind that aluminum imports are a threat to U.S. national security and that broad and immediate Section 232 remedies are necessary to address the threat.

I am a proud Army veteran with over 30 years of experience as an Army aviator, strategist and intelligence officer.

My final post prior to retiring from the Army in 2007 was as Deputy U.S. military representative to the NATO military committee in Brussels.

In 2013, I authored a study on the military’s growing and dangerous reliance on foreign nations for the raw materials, parts and finished products needed to defend the United States.

I concluded then that the United States drilling reliance on imports of aluminum bauxite and other materials places our U.S. national security at risk.

This conclusion was true back in 2013 and is especially so today as the domestic aluminum industry’s financial and operational condition has only worsened due to imports.

Aluminum is a raw material with critical U.S. national security applications.

Primary aluminum and other aluminum products are used in a variety of military applications including F18 and F35 fighter aircraft, Navy and Coast Guard vessels and Army and Marine Corps tactical vehicles.

Aluminum’s high strength to weight ratio, formability, rigidity and ballistic protection are indispensable to our modern arsenal.

As an Army aviator myself during the 1980s I saw firsthand the importance of aluminum in providing the lightweight strength essential to my aircraft’s wings for high stress flight maneuvers.

Aluminum is also used in numerous critical infrastructure applications including bridges and highways, building and other construction.

Aluminum is widely used in utility grids.

In the event of war, natural disaster or any other natural emergency, damage to our critical infrastructure is likely which would only increase our demand for aluminum and reinforced importance of ensuring adequate domestic supply.

Therefore, as it has done in prior Section 232 investigations, the Commerce Department should continue to broadly define national security to include our critical infrastructure.

It is no secret that the Chinese government provides massive subsidies to its aluminum industry.

The result of China’s growing aluminum overcapacity and production has been a complete collapse in global aluminum pricing.

Because all aluminum is priced from the global exchange, U.S. imports of aluminum simply transfer the adverse price and volume effects of Chinese excess capacity and production to our market which has sent U.S. prices tumbling.

The collapse in U.S. pricing has resulted in dramatic declines in U.S. production capacity and revenue.

In 2010, the U.S. industry had 3.3 million tons of capacity and produced 1.7 million tons of primary aluminum.

Last year the industry had 1.9 million tons of capacity and produced only 820,000 tons.

This year, these figures are expected to be even worse.

Hundreds of highly skilled jobs have been lost in the process.

The current state of the domestic aluminum industry is simply unsustainable from a national security standpoint.

Our national security relies on the U.S. industry’s smelting capabilities.

However, given the dramatic declines in U.S. primary aluminum capacity and production the vast majority of primary aluminum is now produced overseas.

This means that U.S. producers of finished products that are directly used in our military and critical infrastructure increasingly rely on imports from Russia, the Middle East and elsewhere for this critical input.

These are potentially (unintelligible) sources of supply and at best unstable sources of supply.

Qatar provides a good example of the dangers of relying on imports.

Just two weeks ago, several of its Middle East neighbors severed diplomatic ties with Qatar.

Leaving the country without the logistical capability to ship its aluminum outside of the country and placing those relying on Qatar’s aluminum exports in a vulnerable position.

Put simply, having to rely on aluminum imports that travel over water during a conflict is a risk to our national security.

It is also important to consider the industry’s ability to supply national security products in the context of the industry as a whole.

If the commercial market is unprofitable, the defense production sector and with it not only the smelters but also the R&D; cannot survive.

With this mind, the immediate relief for the aluminum industry is imperative including one, recommending remedies that yield a meaningful opportunity for the U.S. aluminum producers to recapture lost market share and rebuild broken supply chains.

Two, taking a broad view of the national security importance of aluminum considering production for military weapons and equipment as well as homeland security and critical infrastructure.

Three, providing relief to the entire aluminum supply chain.

The U.S. industry must remain healthy throughout the production chain by incentivizing production from smelting to the finished and fabricated product.

Four, establishing enforceable mechanisms for the elimination of global aluminum overcapacity.

And lastly, rigorously applying domestic sourcing policies already existing in our government procurement of aluminum.

Distinguished panelists I applaud the administration’s initiation of this Section 232 investigation.

We cannot allow our American aluminum to pass the R&D; and skilled workforce to disappear.

We need concerted action to address these national security risks for domestic aluminum capacity before we lose it.

Thank you.

Man: Thank you.

Questions from the panel?

Thank you so much.

Our next speaker, Mr. Hockema.

John Donnan: Hi good morning.

Actually John Donnan, Executive Vice President of Kaiser Aluminum.

We welcome your leadership initiating this investigation and are pleased to be able to testify today.

The products we produce from high strength aluminum alloys and the capacity to produce those products in the U.S. are critical for U.S. national security.

And we support measures that effectively target unfair competition and address the needs of the entire aluminum value chain including downstream U.S. aluminum fabricators.

Commercial viability is a prerequisite to national security availability.

Broad protective measures aimed at all suppliers of primary aluminum will maturely increase our cost and undermine our ability to effectively compete in global markets against foreign downstream fabricators that are not impacted.

Those unintended consequences would create an advantage for those foreign downstream fabricators including new government subsidized Chinese rolling mills.

And for the downstream fabricators like Kaiser aluminum at risk.

In addition, our competitiveness and the competitiveness of our domestic customers will be substantially and negatively impacted to an increased risk of aluminum intensive finished products supplied by unimpacted foreign downstream fabricators.

By way of background, Kaiser Aluminum is a member of the Aluminum Association and a leading producer of fabricated aluminum products for defense, aerospace, general engineering, automotive and custom industrial applications.

We operate 11 fabricating facilities in the United States and one in Canada.

We employ over 2700 employees and ship more than 600 million pounds of plate, sheet, extrusions and other products to a global customer base.

Our facilities have long history of supplying products to U.S. military dating back to World War II.

Today our products are used in more than 50 military aircraft including the F18, F22 and F35 Joint Strike Fighter.

We also produce material for armor and mine blast kits for a variety of military platforms including the Humvee and (unintelligible) as well as extrusions for munitions, arms, mortars and rockets.

As a downstream participant, the U.S. aluminum industry we convert primary aluminum or secondary aluminum purchase from third parties into our products.

We purchase our primary aluminum through a globally diversified supply base which supports our globally competitive cost division and an integral (unintelligible) supply.

The downstream sector of the U.S. aluminum industry requires a significant investment in recent years.

Kaiser Aluminum has invested over $630 million since 2006 to increase capacity, lower cost and improve quality.

Maintaining our ability to effectively compete in global markets and invest in our facilities and produce these products are in the U.S. are important not just for jobs provided and community supported across the country but also for our long term national security.

Global market and balances in the aluminum industry are unprecedented excess capacity in China facilitated through decades of illegal and subsidized investment in production.

After exponentially expanding its primary aluminum production, China continues to create downward pressure on world aluminum prices.

Negatively impacting U.S. producers of primary aluminum and contributing to the shuttering of U.S. aluminum smelters.

Similarly, China has been and continues to engage in massive predatory government subsidized expansion into the production of downstream aluminum products whose stated intent to support Chinese expansion in military aircraft, support new Chinese competitors and export those products.

In addition, Chinese circumvention of U.S. duties through misclassification and/or transshipment through other countries and the theft of intellectual property also continue to be major competitive concerns.

Kaiser Aluminum supports effective solutions that address Chinese overcapacity, government subsidies and unfair trade practices.

A broadly implied measure that impacts all foreign source primary aluminum with a far more harm than good when it comes to U.S. national security, maintaining and generating secure domestic jobs, ensuring global competiveness of U.S. manufacturers.

And maintaining a strong U.S. manufacturing base for domestic downstream fabricators that supply aluminum products for critical defense applications.

To be clear, we support all measures that effective target unfair competition.

We need a fair system.

If you put us on a level playing field, Kaiser Aluminum and our employees can compete successfully against anyone in the world.

We welcome and embrace that opportunity.

As noted on our brochure, we are proud to serve those that proudly serve.

Thank you for your time.

Man: Thank you for your comments.

Any questions from the panel?

Thank you.

Man: Thank you.

Man: We are ready for our next speaker, Mr. Smith.

Robert Smith: Mr.

Chairman thank you for allowing me to testify today.

My name is Robert Smith and I am President of the United Steelworkers Local 420A based in (unintelligible).

I have over a decade of experience in the aluminum industry and would like to share with you my concerns over the future of an industry that is critically important to the national security of the United States.

In addition, I would like to make you aware that the United Steelworkers Union will be submitting a comprehensive statement in support of the investigation before the close of the comment period.

This investigation comes at a critical time for the American aluminum industry.

Domestic aluminum production is an important component of our nation’s defense, industrial base and vital to our critical infrastructure.

The Department of Defense classifies aluminum as a strategic material with uses ranging from structural airframe material to electronic components and armor plating.

Furthermore, aluminum is increasingly being utilized throughout our nation’s critical infrastructure.

Whether it is the development of solar panels and extensive use in our electrical grid or as a lightweight, high strength building material.

Aluminum will continue to serve a vital role in the rebuilding and maintaining of our nation’s infrastructure.

Ensuring that the nation and military have a stable, reliable supply of this critical material is a national security imperative.

Modern aluminum production especially of military grade, high purity aluminum is a highly complex and highly technical process that requires a trained and skilled workforce.

The development of those skills takes years.

Once capacity is lost, bringing it back online is not something that can be done overnight.

Today there is only one domestic producer (unintelligible) that can produce high purity aluminum and that represents the national vulnerability.

If that producer is forced to shut down because of predatory trade practices it raises the real and unacceptable danger that the U.S. would be forced to rely on foreign sources in the event of an unforeseen future conflict or natural disaster.

And this situation is becoming more of a potential reality each day.

Last year American primary aluminum production dropped below one million tons for the first time since the 1950s.

And so many domestic smelters have either closed or curbed production that only two in the U.S. are considered fully operational.

This is being driven by a glut of aluminum in the global market which is causing a drop in global prices and making it uneconomical for domestic producers to stay in business.

This glut of global aluminum has a sadly familiar (unintelligible) China.

The Chinese government has been illegally subsidizing its aluminum industry for years driving a massive expansion of its production and capacity far beyond its internal demand.

These days subsidized Chinese producers are then dumping this excess production onto world markets.

The proof is in the numbers.

Between 2006 and 2015 Chinese primary aluminum production grew by over 225% and by the end of 2015 it accounted for more than half of all aluminum production in the world.

While as I mentioned earlier, U.S. production reached its lowest point in more than 60 years.

This trend shows no sign of stopping.

Quick governmental action is critical if the American aluminum industry is to survive and continue to provide good jobs for American workers, the highest quality products to the American military and the critical infrastructure that we need.

AS a government approaches this issue let me emphasize that the driving force behind our aluminum problems is Chinese overcapacity.

Unlike steel or dumped and subsidized products have directly impacted our market, China’s policies and practices have suppressed world prices via the London metal exchange where aluminum is priced.

Right now Canadian imports they are the largest single source for consumption in our markets.

But Canadian production is not fueled by a legal and predatory practices and the approach in this 232 investigation must be the target the production of those countries which are engaging in unfair trade.

As our international President Leo Gerard has said, Canada should be exempted from many relief measures that might be implemented as a result of the administration’s actions.

I and other workers in the aluminum sector here in the United States support that approach.

Thank you very much for the opportunity to share my views on this important topic.

Man: Thank you.

Are there any estimates that you are aware of, of how long it takes to train skilled workers to work in the aluminum industry?

Robert Smith: There is really not a lot of science behind that because we have been continuously going down.

So we haven’t ramped up production over the years.

What I do know is that when – it is very rare but if a plant decides to restart it is very – it takes a long process.

It is very expensive and there is a lot of unknowns with it.

There is a lot of safety concerns just because there is not a lot of science behind restarts.

To put it in perspective, our plant started in the late 70s and we haven’t had more than a three hour shutdown since then.

So that it, you know, there is a lot of things.

This is a continuous operation and we just don’t restart very often.

Man: And then what is sort of the average level of experience of say eight members of your local.

Robert Smith: From my experience it depends on the job.

But to get the folks that we need up to speed to run reliably probably half the jobs you could train well in six months to a year.

And then the other half are what actually take to run the potline and it is 10 to 12 years probably before somebody is that good at knowing all of the things that can come up and be able to react to those things.

Man: Thank you.

Any other questions?

Thank you.

Robert Smith: Thank you very much.

Man: Our next speaker.

Marco Palmeri: Good morning Mr. Secretary, members of the panel.

My name is Marco Palmeri and I am the President of Novelis North America.

And I am a member of the Aluminum Association.

I would like to thank you for the opportunity to speak on this important topic today.

Novelis believes that the department investigation is timely and vital to the future of the domestic aluminum industry.

Novelis is the world’s largest producer of flat rolled aluminum product used to make beverage cans, cars and trucks, and other diverse products.

Novelis a $10 billion company operates 24 facilities in 10 countries and it is the global leader in aluminum recycling.

While we are a global company?

We are deeply committed to our North American operations and had made significant investments in our U.S. facilities in recent years.

More than $500 million with additional 500 jobs.

Novelis employees are on 4000 people in the U.S.

We discovered in regional headquarters and global research and technology center in Georgia.

Seven production sites in Georgia, Indiana, Kentucky, New York, Ohio and (unintelligible) and the sales and (unintelligible) in Michigan.

Today I would like to have three main points for the final consideration.

First, Novelis believes it is important for the department to recognize that the aluminum industries of the U.S. and Canada are intertwined with Canada playing a vital role in supporting of U.S. aluminum manufacturing efforts.

U.S. is not operations cannot meet the domestic demand for primary aluminum.

At Novelis, we do (unintelligible) primary and recycled metal from the U.S. but because it is not possible for us to retain all of the primary aluminum that we needed through our U.S. purchases we also rely on primary aluminum imported from Canada.

Additionally, our facility in Canada works in tandem with our U.S. based facilities to manufacture products as part of a complex (unintelligible).

For example, when making certain automotive products, aluminum may cross the border at least four times before it is fully finished and ready to ship to customers throughout the U.S. and Canada and Mexico.

Therefore, to ensure the viability of the U.S. aluminum industry the department should exclude Canada from any remedy recommendation made in its final report.

Second, Novelis believes in free and fair trade.

But there must be a level playing field.

Importers originating from accounts like China with excessive overcapacity driven by government subsidiaries have significantly affected the aluminum industry putting Novelis U.S. manufacturing facilities at risk.

In fact, unfairly priced aluminum from China has already forced us to accept (unintelligible) product lines.

In 2008, we left the (unintelligible) business and shut the facility in Kentucky.

Only a few years ago we sold our household (unintelligible) business.

And in April 2014, we were forced to idle some equipment and lay off workers, experienced workers at our facility in Indiana.

To date, Novelis has maintained profitability by migrating product portfolio to emphasize markets that have not yet been affected by imports from China.

Those imports however have been (unintelligible) new product market segment in the U.S.

Novelis sales people regularly report hitting about (unintelligible) products at extremely low prices.

We also have a strong reason to believe that the Chinese producers will increase the production of automotive aluminum capacity within the next two years.

(Unintelligible) they needed to be exported to the U.S. and subsidized (unintelligible) Novelis could be forced to slash production, lay off employees and shut the entire facilities (unintelligible) are not able to deliver reasonable rates of return.

Third, the same equipment used to process and roll out the sheet can be used to make product (unintelligible) application.

But those applications make up a small portion of the entire U.S. downstream aluminum marketing.

Therefore, if trade measures under this investigation only were enacted to protect the aluminum use directly in defense related products.

Such remedies would not secure the (unintelligible) of the entire (unintelligible) aluminum industry nor its associated hundreds of thousands of U.S jobs.

In conclusion, Novelis respects and requests the department to recognize that one, Canada should be excluded for any remedy or recommendation made (unintelligible) final report.

Two, unfair prices and subsidized imports originates from outside North America.

Negativity affects in U.S. (unintelligible).

And three, relief is needed for the entire aluminum supply chain including downstream rolled product to ensure a healthy aluminum industry in the United States.

Thank you very much.

Man: Thank you.

When you talk about the entire aluminum supply chain is there sort of industry accepted definition or group of HS codes that would objectively identify what those products are?

Marco Palmeri: Well we talk about the entire supply chain it comes from the bauxite mining to the smelting, the semi-application which is rolling.

Its extrusion product and that is the definition.

Then we supply this product to the end markers.

Like something planned and things like that.

Man: I see thank you.

Any other questions from the panel?

Marco Palmeri: Thank you.

Marco Palmeri: Thank you very much.

Man: Ready for our next speaker.

Man: Hi good morning ladies and gentlemen and thank you for the opportunity to testify today.

I am (unintelligible) CEO of (unintelligible) based in Baltimore, Maryland and a member of the Aluminum Association as well.

(Unintelligible) aluminum leader listed on the New York Stock Exchange we have 12,000 employees, generate $5 billion in revenue and the U.S. is about 40% of our business.

We have a large industrial presence with plants in West Virginia, Alabama, Michigan, Kentucky, Georgia and R&D; in Michigan.

Our main clients include Boeing, Airbus, Lockheed Martin, SpaceX, (unintelligible), (unintelligible), (unintelligible), General Motors, BMW to name a few.

In the different markets we have been (unintelligible) U.S. defense industry for decades working with U.S. defense companies such as Lockheed Martin.

We also partner with the U.S. Army to develop new aluminum solutions for armored vehicles.

In our plant in (unintelligible) West Virginia we are manufacturing advanced alloys for military aircraft and armored vehicles which supply plates for military aircraft and jet fighters such as Boeing C-17 Globemaster, the F16 or the new F35 Joint Strike Fighter.

We consider the U.S. to be one of our key markets.

This is why we have invested in last five years over $1.8 billion in our U.S. plants and (unintelligible) $170 million.

Our current position as global leader is a direct result of the significant investment program.

However, our business is threatened today by China’s long term practice of market distorting policies.

The risk that we are facing today are directly linked to the costs and due cost advantage to change aluminum converters are benefiting from.

In particular, (unintelligible) in the access to low cost raw material puts us at a great disadvantage.

Primary aluminum traded on the Shanghai Futures Exchange as regularly a price advantage over the price paid by U.S. players which is based on the London metal exchange price.

But none Chinese players cannot access that raw material as there is a 15% export duty on primary metal and aluminum scrap out of China.

This cost advantage has driven greater for the Chinese aluminum conversion industry as Chinese rollers and extruders in addition to benefiting from lower production costs and lower raw material costs also profiting from (unintelligible) exports of 13% to 17%.

So (unintelligible) this means that for a product that sells for say $3000, China would have the $500 and more advantage from tariff and duty structure which represents more than half of our value add.

So this unfair pricing is already impacted our business even though we believe the worst is still to come.

Already we have witnessed a significant increase in for instance, China’s U.S. imports of plates from 5000 tons in 2012 to almost 70,000 plates in 2015 in the span of three years.

And that represents more than 25% of the market and more than our (unintelligible) shipments of our mill in Ravenswood.

This obviously resulted in missed revenue for our U.S. business, missed profits and fewer jobs.

This situation threatens our (unintelligible) business which relies on both high valuated products and larger volume standard products because of the fixed costs incurred by our facilities large installed capacity and equipment.

Furthermore as China’s interest and skills in aluminum valuated products are rising, our industry is at even greater risk.

In the coming years China is expected to acquire the technical knowledge to produce also higher end products and is already pushing to the global aerospace and automotive markets.

The (unintelligible) more fronts with us having little ability to fight back.

Such a situation is obviously not sustainable in the long term.

And as a direct impact (unintelligible) invest in our plants and in our assets.

What actions are needed to address excess capacity and unfair pricing from China I would like to express our strong support of fair rules based trade of aluminum among the United States, Canada and Europe.

Industries interlinked by a global supply chain and it is quicker for our success.

For these reasons I respectfully request that a Commerce Department and the administration permit actions to address China’s unfair trading practices.

Remedies should consider the whole value chain and should target all Chinese originated products without exclusions.

They should be tailored to address China’s (unintelligible) subsidies while protecting existing relationships between U.S., Canada and Europe.

Thank you again for your time.

And we appreciate the leadership and foresight that the administration is showing in addressing this issue earlier.

Thank you.

Man: Thank you for your comments.

Questions?

And we are ready for our next speaker.

Bob Prusak: Good morning.

My name is Bob Prusak.

I am the CEO of Magnitude 7 Metals.

Magnitude 7 Metals recently purchased and idle smelter located in New Madrid, Missouri which had previously been operated by Noranda Aluminum prior to the bankruptcy in 2016.

Thank you for this opportunity to testify today and explain why Section 232 relief is necessary for the domestic aluminum industry.

Domestic primary aluminum production is in the midst of a crisis driven by Chinese overproduction.

This Chinese overproduction has led directly to declining global prices.

Put simply, our industry is at a critical turning point and at risk of disappearing absent much needed relief.

The number of domestic aluminum smelters in the United States has gone from 23 in 2000 to 5 today.

With only two running at capacity.

I would like to talk to you about 2 of these smelters today.

The Ormet Smelter in Hannibal, Ohio and our facility in New Madrid, Missouri.

I have a personal connection to both.

I serve on the board of Ormet Corporation, a domestic producer of primary aluminum from 2007 to its closure in 2014.

In early 2013, Ormet announced it was curtailing the operations of its 272,000 ton smelter in Hannibal, Ohio which is located along the West Virginia border south of Wheeling.

Ormet started producing aluminum at its production plant in 1956.

Like other U.S. smelters, in the years leading up to its closure, Ormet’s production suffered from falling aluminum prices and rising imports largely driven by global and principally Chinese overproduction.

Ormet laid off roughly 1000 workers in 2013 most of them unionized steel workers.

With market conditions continuing to deteriorate at the end of July 2014, Ormet can no longer withstand the onslaught and announced the permanent closure of its smelter, firing the last 20 workers and dashing any hope that its operations would be revived.

Not only did Ormet’s closure deal a heavy blow to the workers and their families relying on the company for a decent wage.

It also sent shock waves throughout the Ohio River communities.

Ormet was effectively the sole employer to both Clarington and Hannibal, Ohio and was the largest employer in New Martinsville, West Virginia.

When Ormet closed these towns were decimated.

Unfortunately this story has been repeated in communities throughout the United States.

Just last October my company purchased Noranda’s distressed smelting (unintelligible) bankruptcy.

As with Ormet, the New Madrid smelter was forced to strip down after more than 45 years in operation.

The New Madrid facility produced primary aluminum and some semi-finished aluminum products used in both U.S. military and critical infrastructure applications that are vital to U.S. national security.

Roughly 900 high paying, high skilled jobs were lost when Noranda closed.

Many of these workers are still out of work today more than a year later.

When the smelter was operational, the company and its employees spread roughly $45 million throughout Southeast Missouri.

With this money gone everyone from local restaurants and businesses to local school districts felt the pain.

New Madrid County where the smelter is located also took a big hit losing millions of dollars in tax revenue annually.

As a result, the local government was forced to delay projects, institute hiring freezes, less infrastructure spending and postpone wage increases.

Community programs are negatively impacted as well as the local police and ambulance services.

Because the revenue from Noranda comprised nearly 17% of the entire budget for the school district a budget deficit resulted leading to layoffs, staff reductions and program cuts.

Six months after Noranda’s closure the unemployment rate in the county more than doubled.

For Magnitude 7 are only two among a number of (unintelligible) smelters.

We are not yet operational.

We are currently negotiating a new power contract and hope to restart operations soon.

However, without comprehensive Section 232 relief, our ability to fully restart operations is far from certain.

Relief is nothing short of critical to get us up and running and bring Southeast Missouri back to life.

This leads me to my final point.

Section 232 relief must be broadly granted to the domestic aluminum industry.

Relief on high purity alone is insufficient to bring aluminum production back to the United States.

If we continue to allow imports to erode our market share of primary aluminum we will lose the ability to produce primary aluminum of any grade.

High purity or otherwise.

High purity aluminum will only ever be a small portion of the output at even the most efficient aluminum smelters in the world.

Our basic primary aluminum production must therefore be viable in order to allow high purity production domestically.

Finally, I would like to stress that excluding any import sources other than Canada in Section 232 relief would undermine any relief granted to the point where the U.S. industry would see virtually no benefits.

If the United States is going to maintain its ability to produce the aluminum that is vital to our national security we cannot allow the relief to go undermined.

Thank you for your time and consideration.

Man: Thank you for your comments.

Questions?

Thank you sir.

We are ready for our next speaker.

Thomas Robb: Good morning.

My name is Thomas Robb, Chief Operating Officer of New Day Aluminum and its Noranda Alumina subsidiaries.

I welcome this opportunity to offer my company’s unique perspective on the Commerce Department’s Section 232 investigation into imports of aluminum.

Our perspective is unique because we operate through Noranda Alumina.

The only smelter grade aluminum refinery remaining in the United States.

Alumina is the critical raw material in the production of aluminum tracing aluminum back to its source.

The aluminum process begins with bauxite which is refined to produce alumina.

Which is then converted to aluminum through an electrolytic process.

It takes approximately two pounds of bauxite to produce one pound of alumina.

And two pounds of alumina to produce one pound of aluminum.

Our alumina refinery is located along the Mississippi River in Gramercy, Louisiana.

It currently produces more than 1.1 million metric tons of alumina annually and employs 440 people.

Through our Noranda bauxite subsidiary we also operate a bauxite mining operation in (unintelligible) Jamaica that supplies our alumina refinery.

Noranda Alumina is the principle source of alumina supply to Century Aluminum, the largest remaining U.S. based producer of primary aluminum for two of its three operating smelters in the U.S.

Century is a significant U.S. based producer of high purity aluminum which is necessary for a number of national defense and military applications.

We are proud of that partnership and its service to our nation.

We respectfully recommend that any trade policies considered in this investigation should include protections to ensure the continuation of a U.S. based supply of alumina.

We further recommend that any review of the national security effects of imports of aluminum must also include a review of the U.S. supply and access to bauxite ore from which aluminum and alumina itself is derived.

As the department may be aware, there are no longer any bauxite mining operations in the U.S.

The closest sustainable foreign source of bauxite is in Jamaica where Noranda bauxite is strategically position.

The other three major mining facilities in Jamaica are wholly or majority owned by Chinese, Russian and Hong Kong interests.

And none are permitted to export bauxite out of Jamaica.

Rebuilding the U.S. stockpile of bauxite ore which began in the 1930s and which was reinvigorated by President Reagan during his administration would be one way for the U.S. to alleviate the risks associated with sourcing this raw material exclusively from foreign countries and/or foreign interests.

We therefore suggest that this administration give strong consideration to creating a U.S.

stockpile of bauxite and we would be willing to work with the government on building up and managing that strategic research.

As for the importation of aluminum itself, we understand the department’s need to review a variety of trade policies related to this issue.

However, and we share this with great deference.

We believe trade policies that might significantly restrict or eliminate foreign imports of aluminum may have unintended but significant negative consequences.

For example, in 2016 the U.S. produced approximately 60% less primary aluminum than it produced in 2012.

Over the same period, U.S. demand for raw and semi manufactured aluminum increased by more than 40%.

This tells us that the importation of primary aluminum is necessary and must continue especially in the near term.

I am a businessman and not an economist.

But I believe that the current Chinese dominance and the production of both alumina and aluminum creates an ability for China to manipulate the aluminum value chain for its benefit.

If such manipulation puts U.S. and other allied countries alumina and aluminum production facilities out of business, we and our allies will become dependent on foreign sources of these critical raw materials.

We recognize that may be the worst of all possible scenarios but merely suggests that all eventualities be considered in your investigation.

In conclusion, we recommend that the department consider creating a strategic reserve of bauxite in the U.S.

We also recommend that the various unintended consequences of severe tariffs or trade regulations on foreign imports of aluminum only one of which would postulate here.

Be examined in robust detail in considering whether and how such restrictions should be imposed.

Thank you for the opportunity offer our comments.

I welcome any questions you may have.

Man: Thank you.

On the issue of no bauxite mining in the United States.

Is that because there are no bauxite deposits left?

Or is it for other reasons (unintelligible).

Thomas Robb: There is no economically extractable bauxite from a quality perspective.

Man: So that is not kind of a trade issue it is just a natural resources issue.

Thank you.

Thomas Robb: Other questions?

Man: Thank you sir.

We are ready for our next speaker.

Paul Henry Chevalier: Good morning Mr. Secretary and members of the panel.

Thank you for the opportunity to share Jupiter Aluminum and its employees view here today.

My name is Paul Henry Chevalier.

I am the President of Jupiter Aluminum Corporation an American quality health aluminum producer based in Des Plaines, Illinois.

I’m here today because we need to preserve our industry and manufacturing jobs by establishing a level playing field with honest and fair competition the market (disgusting behavior sees).

Jupiter Aluminum is turning 25 this year and since 1992 grew from a (unintelligible) silver and (unintelligible).

We are about 400 people working with three plants two in Indiana and one in West Virginia.

24/7 we transform aluminum scraps (unintelligible) domestically into (unintelligible) (sold) in the construction with (unintelligible) distribution and (government) markets.

(Unintelligible) was probably had a license but cashing out mill one day.

Over 95% of our products are sold in the US and Canada.

While we electively (unintelligible) compared to many other even producers to (particular) impact on their local and domestic economies is much larger than its own size when you factor in the various vendors and partners operations require and there’s no need to remind everyone that manufacturing and manufacturing related jobs they’re very well with excellent benefits.

Today I will focus on three specific damaging consequences over the Chinese trade practices.

The first damaging consequences directly related to fair trade.

The aluminum markets started attracting the Chinese in 2003.

The (administration) organized a meeting with a (unintelligible) assistance to the Secretary of Commerce in December 2003 to raise the issue with the Chinese trade practices that allowed them to sell below market price.

Not much resulted from this meeting.

Since then Chinese aluminum production sold from 11% of (worldwide) supply to 55% today.

Twenty-One American smelters closed in the same period.

China developed this extraordinary capacity during one of the world’s worst recessions.

Jupiter Aluminum adapted to the new economy environments of patented high temperature of (unintelligible) technologies said 70% of our natural gas consumption.

The technology by the way also reduces CO2 emissions by 70%.

However innovation did not suffice.

We also (unintelligible) costs investments and growth.

Competition is good and it forces you to continuously improve.

That however only worth when standard economy rules apply to everyone.

In China financial liability doesn’t seem as important as providing jobs and maintaining social stability.

Once American aluminum production is gone nothing would (let) Chinese companies from moving downstream and directly sell finished goods to our customer’s customers.

Today China is still increasing production resulting in (unintelligible) service supply.

That’s all job creation in China versus financial performance in the US is unfair.

The second damaging consequence is related to a (chiseled) future.

The second consequence is global as it affects human health.

ETA regulations are good for a reason.

However its standards only affect to American industries.

(The Administration) has found that each Chinese aluminum producers energize by coal fire power plants from city to country that country would be the 16th largest (unintelligible) of greenhouse gases in the world.

North American production by comparison is cleaner because it’s regulated.

Replacing clean production by dirty production is unfair.

The third damaging consequences in our country’s future.

Jupiter’s mills are based in the heart of the city industry over the last 30 years the region has seen the steel mills bankrupting and downsizing.

During that time demand did not really disappear only production moved to China.

The same is happening to aluminum.

It has become increasingly difficult to attract the next generation in our industry as it has seen its parents lose their jobs and beyond their jobs they are faced in the future.

The questions are can our countries fly without an industry?

Should our country become completely dependent on China for its manufactured goods.

It’s clear today that we must work with China on an agreed upon fast forward.

That said the fast forward has to be fair and honest without market disgusting behaviors.

Thank you Mr. Secretary and thanks to the members of the panel for this opportunity to address the industry’s concerns today.

Matthew Borman: Thank you for your comments.

Any questions from the panel?

All right thank you.

We will now take a 15 minute break so we will reconvene at 10:55.

Thank you.