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Green aluminum market to take off in 2021: Rusal

  • Author
  • Ekaterina Bouckley    Diana Kinch
  • Editor
  • Shashwat Pradhan
  • Commodity
  • Metals
  • Topic
  • Energy Transition Environment and Sustainability

Rusal said July 28 it expects the green aluminum asset class -- requiring CO2 emissions to be limited to a maximum of 4-7 metric tons per ton of metal produced -- to take off next year and its supply to grow in excess of 10 million mt/year.

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Rusal expects its green carbon aluminum sales to reach 3.5 million mt/year by 2025, comprising 80% of the total amount of metal it will sell mid-decade.

The 3.5 million mt target means this volume will be sold as a separate asset class and will be recognized by that time as possibly the lowest carbon aluminum product with a price premium.

The company does not disclose the current share its aluminum brand ALLOW (made with less than 4 mt of CO2 emissions per metric ton of metal) has in its total production. However, it said it is already capable of maximizing this production.

"Even now we can produce over 90% of aluminum with the lowest carbon footprint (2.6 mt of CO2 per mt of aluminum) powered by hydro energy," Roman Andryushin, Rusal's director for marketing and sales, told S&P Global Platts.

Depending on whether the low carbon footprint is defined as maximum 4 mt of CO2 per mt of aluminum or maximum 7 mt, or within this range, the company estimates the current global green aluminum supply at anything between 8 million mt/year and 14 million mt/year, but it does not have the data to make an assertion on the expected market volume by mid-decade.

"Now the volume of the world green aluminum supply is below 10 million mt. This represents about 15%-17% of the entire global primary aluminum supply that totals 60 million mt," said Andryushin.

The next five to 10 years will likely see this share grow fast, according to Rusal. "If we are talking about the next decade through to 2030, particularly in Europe, there are some ambitious climate targets in terms of decarbonization," Gregory Barker, executive chairman of EN+, parent company of Rusal, said in an interview with Platts.

"If the governments want to meet these goals, they have to ensure low carbon aluminum becomes a norm rather than an exception. By 2030, I would confidently expect low carbon aluminum to replace coal-fired metal for its big consumers," Barker said.

Stimulus to aid market recovery

Rusal executives said they see "a good chance for recovery" in the aluminum market on the back of the post-COVID-19 economic stimulus from various governments. The company expects its sales to be at 90% of normal levels by the fourth quarter, with an overall drop of 10%-15% for the whole year from previously-projected sales volumes.

It sees current aluminum market prices as favorable and sustainable in a more disciplined market than earlier, although "we do need more closures, especially of high-carbon, pollutant producers, in China and ex-China" due to market supply surplus, it said.

Rusal is not eyeing any acquisitions in the market as its focus is on organic growth, it said. "We've got a lot to do to drive down our carbon footprint even further," Barker added.