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Apple backing Rio, Alcoa play to commercialize carbon-free aluminum smelting

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Apple backing Rio, Alcoa play to commercialize carbon-free aluminum smelting

Apple Inc. has facilitated a new joint venture launched May 10 between Rio Tinto and Alcoa Corp. called Elysis for the large-scale development and commercialization of a process to make aluminum whose only byproduct is oxygen and which will eliminate all direct greenhouse gas emissions from the traditional smelting process.

Apple, which uses aluminum in many of its products, is providing C$13 million along with specific intellectual property and patents, and together with Rio, Alcoa and the federal Canadian and Quebec governments will collectively provide C$188 million towards the initiative.

Quebec will own a 3.5% stake in the joint venture, with the remaining ownership to be split equally between Rio and Alcoa.

The patent-protected process was developed by Alcoa and is already producing metal at the Alcoa Technical Center near Pittsburgh in the U.S., where it has been operating at different scales since 2009.

Alcoa President and CEO Roy Harvey said the technology's discovery had been a "long-sought-after goal" for the aluminum industry, while Rio CEO Jean-Sebastien Jacques said the technology had made products "infinitely recyclable, stronger, lighter and more efficient".

Montreal-headquartered Elysis, which will have a research facility in Quebec's Saguenay-Lac-Saint-Jean region, will develop and license the technology so it can be used to retrofit existing smelters or build new facilities, and when fully developed and implemented the technology will strengthen the closely integrated Canada-U.S. aluminum and manufacturing industry.

The new joint venture's CEO is Vincent Christ, who has been at Rio Tinto Aluminium Ltd. for more than 30 years, most recently as head of technology, research and development and automation programs. Elysis will directly employ 100 people, including research and development, management and sales staff.

The plan is for the technology to be made available for sale by 2024. The new joint venture company will also sell proprietary anode and cathode materials, which are touted to last over 30 times longer than traditional components.

The name Elysis refers to the process at the center of aluminum smelting, the electrolysis of alumina, and the new technology could eliminate the equivalent of 6.5 million tonnes of greenhouse gas emissions in Canada alone if fully implemented at the country's existing smelters — roughly equal to taking nearly 1.8 million light-duty vehicles off the road.

Rio and Alcoa will provide C$55 million in cash over the next three years and also contribute specific intellectual property and patents; and the JV intends to invest up to C$40 million in the U.S. alone, including support for the supply chain for the proprietary anode and cathode materials.

Canadian Prime Minister Justin Trudeau joined executives from Rio, Alcoa and Apple for the May 10 announcement, saying it would create and maintain thousands of jobs for Canadians, while Quebec Premier Philippe Couillard said his government's investment would help ensure the technology could deliver significant environmental benefits with well-paid, highly skilled jobs in his province.

Technology to have broader significance

Sydney-based Alex Tonks, head of the Australian and New Zealand unit of research company CRU, said the metals sector is already being influenced by the transition to a low-carbon economy, both on the demand and supply sides, and was primarily being driven by policy.

"For all these things there has to be a cost-competitive angle. This looks like very interesting technology, particularly now that the sector is more profitable," Tonks told S&P Global Market Intelligence.

Perth-based advisory firm Future Smart Strategies's Managing Director Ray Willis, who has advised Alcoa on "strategic change" and has talked broadly with the company about renewables on multiple occasions, said the new JV was much more than just "green-wash" as Alcoa had been "fundamentally contributing to change in that space".

He said Alcoa had reduced its emissions associated with production by "well in excess" of 30% since the 1990s.

"Aluminum is sometimes referred to as 'solidified electricity' because the energy inputs in the smelting process are so large, so anything we can do to improve the efficiency of the production of aluminum will reduce emissions, where production is associated with electricity and energy from fossil fuel sources," he told S&P Global Market Intelligence.

"There are a number of smelters around the world which run strictly on hydro and more increasingly on other mixes of renewables, and I am aware, because I've had these conversations recently with Alcoa, of their continuing role in working in the emissions reduction arena, specifically as climate action.

Alcoa was part of a consortium that lobbied for an emissions trading system during the George W. Bush presidency, and worked with the Obama administration on a similar scheme, Willis added.

Moreover, Willis said improving the efficiency for aluminum should, in theory, bring costs down right through the supply chain to end use, particularly given aluminum is a light metal important in the light-weighting of materials for aircraft, motor cars and a range of other things.