INTERVIEW: Novelis bullish on aluminum demand going into 2025 amid sustainability push

US-based Novelis expects 2025 to be a strong year for aluminum demand, as it sees growth opportunities in the beverage packaging and automotive industries, Pierre Labat, chief strategy and sustainability officer for the aluminum rolling and recycling company, said in an interview with S&P Global Commodity Insights.

Labat said that rising consumer demand for eco-friendly packaging, along with the automotive industry's shift toward electrification and Novelis's strategic investments to improve recycling rates, should play a pivotal role in positioning Novelis to meet future aluminum needs while reducing carbon footprints. Novelis's reported net income attributable to its common shareholder of $128 million for the July quarter, down 18% year over year.

"We continue to see very encouraging growth rates for aluminum in beverage packaging, which is driven in part by new categories using aluminum like still water and ready-to-drink beverages," Labat said. "More eco-conscious consumers are wanting to shift from single-use plastics. This is clearly visible in North America and Europe in particular."

In the beverage packaging sector, Novelis expects global aluminum demand to grow about 4% per year through 2030.

Aluminum demand from the automotive sector is also expected to see growth, although a slower-than-anticipated growth rate in the electric vehicle sector has led Novelis to decrease its automotive aluminum demand expectations.

"The electrification of vehicles has been slightly lower than anticipated in 2024, and we don't expect that to change in 2025," Labat said. "While electrification provides more opportunities for aluminum, the fact that it is growing at a slower pace than previously expected has an impact on the demand for aluminum."

Aluminum is often used to make the enclosures that house the battery packs of electric vehicles.

Aluminum demand is "still growing at a healthy 6% per annum rate, but this is a little bit lower than what we would have said a year ago," Labat said.

In addition to its optimistic outlook on aluminum demand, Novelis is making significant progress in developing a single aluminum alloy for aluminum cans. The aluminum beverage can industry commonly use different alloys for can bodies and ends, which limits the potential for high recycled content.

By creating a single alloy for both components, Novelis aims to eliminate cross-contamination during recycling.

"What we're trying to do is find a solution that would allow us to make the beverage can with a single alloy, and we call that the uni-alloy. So, there's no cross-contamination of the can body and the end," he said.

This approach could simplify the recycling process and increase the recycled content of beverage containers as high as 99%, Labat said.

Executing the uni-alloy concept requires customers to redesign their can ends to accommodate a single-alloy method.

"Now we're seeing customers willing to engage to do that," highlighting a collaborative effort that is expected to gain traction in Europe in 2025, Labat said.

Additionally, Novelis is collaborating with US-based Aluminum Distribution Inc. (ADI) to raise the low recycling rates in the US With only about 45% of beverage cans being recycled, Labat emphasized the need for collective action to improve these rates.

"It's critically important for us to collaborate with a coalition of stakeholders to increase that recycling rate and to allow those cans to be diverted from landfills back into the supply chain," he stated. The partnership with ADI aims to enhance recycling infrastructure and consumer behavior, which are essential for boosting aluminum recovery rates.