US ALUMINUM: Data center-driven power prices pose major challenge for US primary aluminum sector

This report is part of a series on impactful trends in the US aluminum market based on S&P Global Energy pricing, news, and analytics.

Amassive build-out of data centers by major technology companies is exacerbating a decades-long struggle by the US primary aluminum sector to access affordable energy.

Aggressive plans by companies such as Amazon and Google to expand artificial intelligence-related infrastructure are expected to strain the US energy grid, with US data center energy consumption projected to nearly double by 2030 compared to 2025 levels, according to S&P Global Market Intelligence.

Meanwhile, US primary aluminum smelters have been struggling with high energy costs for over two decades. The average US price of electricity to industrial customers rose by 24.9% from 2015 through 2025, according to the US Energy Information Administration.

The AI boom is expected to exacerbate the issue, with some experts warning that the threat is existential in nature. US aluminum production has declined starkly over the past two decades in the face of Canadian production, which benefits from low-cost hydropower and, until 2025, tariff-free entry to the US. For the US to rebuild capacity, energy costs will need to be addressed, analysts and experts said.

"Our industry has been growing in a lot of respects, but a lot of that growth has been in the mid and downstream, like recycling and building out our secondary production base," Matt Meenan, vice president of external affairs for the US-based Aluminum Association trade group, told Platts, part of S&P Global Energy. "Where we have absolutely struggled in recent years and in recent decades, really, is on the primary aluminum side."

In 2000, the US had 25 active primary aluminum smelters, but only four remain today, according to Market Intelligence.

The decline in smelters represents a drop in domestic production from 3.7 million mt in 2000 to 670,000 mt in 2004, according to the US Geological Survey.

"The fundamental reason for that has been energy issues in the US," said Meenan. "There simply isn't easy, ready access to energy at the price point that makes a smelter economically competitive today in the global marketplace in the United States."

A single aluminum smelter is enormously energy-intensive, requiring about 11 terawatt-hours of electricity, according to Meenan. This is roughly the same amount of energy required to power a city like Boston for a year.

The surge in data center construction has made power supply in the US even harder to access affordably.

"In terms of competing with data centers [for energy], we're looking for a power price in the $30 to $40 per megawatt-hour [range]," Molly Beerman, CFO of aluminum giant Alcoa, said at a Dec. 3 conference hosted by Citibank. "Data centers are paying more than $100 per megawatt hour... I don't think we're head-to-head competing with data centers on our existing smelters. But certainly, any new smelter capacity is going to have to struggle with that competition because the other players are going to be paying a lot more than what is needed for an economic smelter."

Pittsburgh-based Alcoa, which is a member of the Aluminum Association, operates two of the four active primary aluminum smelters in the US. The other two smelters are operated by Chicago-based Century Aluminum.

Alcoa and Century both declined to comment for this piece, as they are in quiet periods ahead of their first-quarter earnings calls.

New US smelters in the works amid tight electricity markets

Despite the challenging power landscape, there are plans for two new US smelters.

Century Aluminum announced plans in March 2024 for a new, low-carbon aluminum smelter backed by funding from the US Department of Energy. Emirates Global Aluminium, which is jointly owned by the sovereign wealth funds of Dubai and Abu Dhabi, announced plans in May 2025 to build a $4 billion smelter in Oklahoma.

However, experts note that neither company has finalized power-supply agreements for the facilities.

"In Century's case, it's been two years since they announced this [new smelter] plan," Annie Sartor, the aluminum campaign director for Industrious Labs, a nonprofit promoting sustainability in heavy industry, told Platts. "Even if Century announced tomorrow that they've found an electricity deal, it should give everyone pause that it took them two years to get there. It's a lesson about how hard it is to find industrial-scale electricity in today's market."

Emirates Global Aluminium said in May that its Oklahoma smelter plan is "subject to the finalization of a competitive long-term power supply for the plant."

Artificial intelligence versus manufacturing

Making the challenge even more significant is that aluminum is an essential raw material for both data center construction and the expansion and modernization of the US power grid, which is necessary to support the AI infrastructure build-out.

"Right now, you're looking at competition between AI and manufacturing," Joe Quinn, executive director for the DC-based SAFE Center for Strategic Industrial Materials, told Platts. "Our belief is it can't be one versus the other. The United States needs both. Economic growth and technological leadership are, in our view, national security issues."

US power consumption by data centers is expected to double or even triple by 2028 compared to their 2023 consumption levels, according to the EIA.

Quinn emphasized that data center developers flush with cash from giants such as Amazon, Google, and Microsoft are outcompeting other critical industries with low margins, such as aluminum, for power supply.

"The only way you're going to have both is by increasing transmission capacity," Quinn said."Meeting this challenge will require federal leadership that improves speed to power, strengthens coordination across agencies, and accelerates the build-out of high-capacity transmission."

The Aluminum Association has been actively engaged with the White House about energy concerns.

"Some of the things we've talked about [with the White House] are things like permitting reform," Meenan said. "There are ways you can make it a little bit easier for us to generate more energy in the United States through permitting reform, more regulatory certainty. We also have made the point that recycling is part of that whole energy story. So things that we can do to incentivize more recycling."

A double-edged sword

Despite the obstacles presented by the data center boom, the expansion of AI is also providing significant opportunities for aluminum.

"The big driver, the hot area for aluminum at the moment is the electrification trend and the AI, data center trend," Jason Kaplan, director of nonferrous metals analysis for Market Intelligence, told Platts. "Those are the booming sectors."

The lift comes at a time when US 50% tariffs on all aluminum imports have caused record-shattering US aluminum prices and trade flow disruptions.

Platts assessed the spot 99.7% P1020 US Aluminum Transaction Premium at 96.80 cents/lb plus LME cash, delivered Midwest, net 30-day payment terms, on Jan. 6.

This assessment has nearly quadrupled from levels seen a year ago, primarily due to US tariffs.

The tariff-induced US aluminum price surge has led to sector-wide concerns about aluminum demand destruction. But data center developers continue to build despite historic aluminum costs.

"Sectors like traditional construction are weakening, so I think it will be harder to pass on those higher prices to a weaker market," said Kaplan. "But anything to do with AI? There's your sweet spot. There, you can perhaps push on the full cost. The desire to have new data centers will trump the high prices."