Green aluminium good news for carmakers

Aluminium makers poised to boost low-carbon metal output by 10% next year

LONDON:

Aluminium makers are set to boost low-carbon metal output by 10% in 2023 and churn out even more in the years ahead, driving down the cost for carmakers seeking climate-friendly supplies and shrinking the industry’s hefty carbon footprint.

Aluminium is the most energy-intensive metal to produce, accounting for about 1.1 billion tonnes of global CO2 emissions per year. Next year’s forecast increase in “green aluminium” output would reduce that by 13 million tonnes, or about 1.2%.

Pressure by governments to cut greenhouse gas emissions has given aluminium producers an incentive to ramp up output of the low-carbon material, which emits less than 4 tonnes of CO2 per tonne of metal compared to the global average of 16.6 tonnes. That means global surpluses of green aluminium, largely produced using hydro power or recycled material, already weigh on the premium that producers can charge buyers, from automakers and beverage can firms to construction suppliers.

“It’s (the premium) been very modest now for the last couple of years,” Ivan Vella, Chief Executive of Rio Tinto Aluminium, told an investor conference last month.

Vella added that the company had seen some increases in premiums recently, without giving details. Global supplies of low-carbon aluminium have been robust for several years, but dipped in 2022, mainly due to restrictions in southern provinces in top producer China that rely on hydro power.

Output is due to bounce back globally next year, rising 10% to 18.56 million tonnes, said Simon Large, analyst at consultancy CRU.

Published in The Express Tribune, December 18th, 2022.

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