Hungary-Mineral Mining and Metallurgy

The aluminum industry developed rapidly after World War II and in the late 1980s employed more than 40,000 workers. The production of bauxite (used in making aluminum) more than doubled since the war, reaching more than 3 million tons in 1986, while alumina (aluminum oxide) output totaled 856,000 tons in the same year. Increased bauxite production was depleting deposits near the surface, however, and costly deep mining had become necessary. Conversion of alumina into aluminum is highly energy intensive, and a lack of inexpensive electricity prevented Hungary from converting more than 25 percent of its alumina output. Therefore, Hungary had to import about 65 percent of the aluminum consumed by its factories each year. Under an exchange agreement signed in 1985, Hungary exported 530,000 tons of alumina to the Soviet Union each year for smelting in return for 205,000 tons of aluminum. In the late 1980s, Hungary received significantly less aluminum per unit of alumina than under previous agreements, largely because the price of aluminum had risen against the price of alumina on world markets since the 1960s. In the late 1980s, Hungary's aluminum-fabrication industry concentrated more on manufacturing semifinished and specialized products and less on bulk production of the metal in the unfinished form. The major aluminum processing plant was the Light Metal Works at Szekesfehervar, which had a capacity of approximately 100,000 tons per year in the late 1970s. Hungary exported much of its bauxite, alumina, and aluminum to the Comecon countries.

Soviet technology and raw-material inputs were key factors in the development of Hungary's iron and steel industry in the 1950s. The large steel mills at Dunaujvaros in Feher County, Ozd, Miskolc, and Budapest have used local low-grade iron ore, but more than 80 percent of their raw-material input originated in the Soviet Union. In the late 1980s, the industry suffered from several major problems. First, Hungary's iron and steel mills were less cost effective than West European mills because, among other factors, Hungary had to pay to transport and process Soviet ore that had only a relatively low (45-50 percent) iron content. Second, the prices Hungary received for its iron and steel exports to convertible-currency markets had fallen. These exports generated losses for the industry, but Hungary continued the trade for several reasons: the domestic market could not absorb enough output to maintain satisfactory use of the country's mill capacity, the state subsidized losses on metallurgical exports, and export income provided the industry with the grounds to increase wages. The industry underwent a sweeping reorganization as part of a 1987 restructuring program that included the elimination of 2,400 jobs. Hungary produced no iron ore in 1986, and analysts expected the country to reduce iron and steel output by up to 10 percent in 1988.

Data as of September 1989