INTERVIEW: China's appetite for recycled aluminum set to drive global scrap value chain

Incoming demand for recycled aluminum in China is likely to start having a knock-on effect on consumption habits elsewhere in the world, particularly in Europe, according to Miles Prosser, the secretary-general of the International Aluminium Institute.

Appetite for primary aluminum will grow too, although this will increasingly rely on supply from India, Indonesia, Malaysia, Vietnam, and possibly Central Asia, he said.

For most of the last two decades, almost all aluminium industry growth has been happening in China. However, with production in the country now almost touching the 45 million mt/year self-imposed cap it set in 2018 in a bid to force its domestic industry to renew and restructure, China will no longer provide that growth, Prosser said in a recent interview with Platts, part of S&P Global Energy.

Quality scrap

A large number of aluminum products introduced in the preceding decades have left China with ample scrap supply, Prosser said, adding that the country will remain the industry's largest player. However, it will now have a new focus on increasing the utilization of that scrap, he said.

Today's challenge with recycling, even in regions that specialize in it, is not about collecting and using more scrap -- it's about maintaining its value, he said.

The historical model for recycling has been to mix various scraps together to produce lower-grade products, but this dilutes the value of scrap and secondary aluminum as well.

"We, as an industry, have got to separate the scrap into the different alloy streams and recycle each into products of the same type so that those alloying elements are a positive rather than a negative," said Prosser. "For scrap to retain its value and near 100% reusability with each cycle, we've got to do more to separate alloys as we collect them, or purify them."

Prosser said that this closed-loop recycling is developing well within the can industry, with scrap going back into the production of new cans. However, the process in the automotive industry, for example, has not been as successful, due to a variety of alloys used in vehicles, he added.

Similarly, the recycling of aluminum in solar modules that are approaching their end of life can be problematic, with the aluminum there often mixed in with other materials, Prosser said.

He said that he expects Europe to lead the way in recycling breakthroughs in this area because energy prices in the EU could inhibit the ramp-up of production from primary raw materials.

Cap driving overseas investment

Given the underlying trend toward greater aluminum use, new primary production is inevitable, Prosser said, with a lot of investment already happening in Indonesia, Malaysia and Vietnam, as the domestic capacity cap prompts Chinese private companies look to expand elsewhere.

For example, China's Shandong Nanshan Aluminum has just approved a $437 million investment to double its primary aluminum capacity in Indonesia.

PT Kalimantan Aluminum Industry, whose first 500,000 mt of some 1.5 million mt/year in smelting capacity came online in December 2025, has a Chinese partner -- nickel producer Lygend.

China's East Hope Group is also planning a 1 million mt/year aluminum smelter in Kazakhstan, and Xinfa Group is looking to develop alumina, aluminum, and copper production there, Pavlodar administration said Jan. 8.

Meanwhile, India is also seeing huge demand for aluminum coming off a very low base and is looking to grow its own production, according to Prosser.

Hindalco Industries has just announced a Rupees 210 billion ($2.29 billion) investment to expand its Aditya Aluminum smelter by 360,000 mt/year.

India's National Aluminium Company, or Nalco, is already going through a growth phase, carrying out a 1 million mt/year expansion of its alumina refinery, and adding 500,000 mt/year capacity at its 460,000 mt/year smelter. In addition, AMG Metals & Materials and Rio Tinto agreed last year to study a 1 million mt/year aluminum project in India.

"As an industry, we have a lesser problem meeting increased demand than other industries: we're not constrained by a lack of raw materials and could lift production quite comfortably. Take copper, or some of the rare earths -- there's a real question mark over how fast they can ramp up production. That's less of an issue for the aluminum industry," Prosser said, but then gave a caveat that outside China, most of the bauxite for the industry comes from only a handful of countries -- namely Guinea, Australia, Indonesia, and Brazil.

Bauxite residue

If production is set to expand, the industry could find itself under greater pressure to address the problem of bauxite residue -- a large volume of waste stream from alumina refineries, known as red mud.

"We've put a lot of work into deriving by-products, and progress is being made on a couple of those, including cement and road base additives. The issue has been to get them officially approved for that use," said Prosser.

The residue also contains valuable materials, including rare earths and gallium, with almost every company now having testing processes in place to extract them.

"We are getting to the point where we could see pilot plants, but whether they will be scaled up depends on the economics," he said. "The most likely model to work is one that tries to recover more than one element; if you just chase one, the economics may not stack up."

The industry generates about 200 million mt/year of bauxite residue, meaning that a single solution cannot handle that much waste, and so a mix of solutions suited to specific places would be needed, according to Prosser.