Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Aluminum giant Alcoa is looking to remove as much as 1.5mn mt of aluminum smelting capacity from the market as overcapacity and sustainability—two issues plaguing the aluminum industry—rear their heads again.


As developing economies prepare for higher levels of aluminum demand from their consumers, primary aluminum production has exceeded 65mn mt on a global scale. Demand for aluminum was listed at 79mn mt in 2018 with a forecast of 4.2pc CAGR over the next two years. 


Those numbers would generally be substantial for pricing. However, with 45mn mt of secondary aluminum capacity, the scales are tilting towards excess, particularly as more scrap aluminum finds its way into the recycling stream via mandatory curbside recycling programs and concerted efforts to take care of the environment. At the current rate of demand growth, the world would still have excess capacity for years to come.

Second on the list of concerns is environmental impact. Touted as “green” long before becoming a corporate buzzword, aluminum smelting for both primary and secondary production produces copious CO2, now considered the primary cause of increasing global temperatures. According to the Columbia Climate Center, aluminum accounts for 1pc of the global CO2 production on an annual basis. 


Not included in the 1pc is emissions from power-providing plant.  The Australian Alcoa plant receives power from a brown coal facility. Long known for its propensity to produce plenty of CO2, these types of power facilities will need to be considered in the revitalization and contraction in the aluminum industry.


As a solution, the company is spearheading a technology that is likely to make smelting an eco-friendlier business, through its joint venture with another aluminum giant Rio Tinto.


Tech-giant Apple purchased its first batch of carbon-free commercial aluminum from Elysis—the Montreal-based joint venture (JV) between these two aluminum giants—on Thursday. 


Apple has partnered with the two global aluminum companies and the governments of Canada and Quebec to invest $144mn to develop a technology that eliminates direct greenhouse gas emissions from the traditional aluminum smelting process. Elysis manufactures aluminum using this technology.


The patent pending technology that was first developed by Alcoa is already in use at the Alcoa Technical Center, outside Pittsburgh, with more than $30mn earmarked to develop it in the US. The JV will use Alcoa’s technical capabilities and Rio Tinto’s global presence to develop this technology further for larger scale production and commercialization, with a package planned for sale beginning in 2024.

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