Sustainability is New Battleground for Aluminium Producers - Andy Home

Mr Andy Home wrote in Reuters that US aluminium producer Alcoa has just announced a five year review of around 4.0 million tonnes of alumina capacity and 1.5 million tonnes of smelter capacity. It's not quite an annual event but Alcoa shareholders have been here many times before as the company keeps trying to move down the cost curve in the face of chronically depressed prices. On the London Metal Exchange three-month aluminium has ground steadily lower over the course of 2019 and at a current USD 1,720 per tonne is close to the near three-year low of USD 1,705 recorded earlier this month. This time around, however, Alcoa is throwing an extra ingredient into the cost-cutting mix – sustainability. The company expects to be the lowest emitter of carbon dioxide among all global aluminum companies. Going green is the new differentiator in the cut-throat business of making aluminium.

Alcoa is hoping to leverage its existing strengths on both fronts. Its entire production chain is certified by the Aluminium Stewardship Initiative, it boasts the lowest carbon footprint of any alumina) refining system in the world and is one of the lowest emitters among major aluminium producers. Around 70% of the electricity powering its smelters comes from renewable sources, a ratio that Alcoa hopes will rise to around 85% after its portfolio review. Alcoa has the advantage of being based in North America, which thanks to Canada's massive hydroelectric dam system has one the highest renewable energy profiles of any major producing region. Hydro power accounted for 82% of North American aluminium production last year

The part suspension of the Alunorte alumina refinery in Brazil last year and closures in China this year have served as a reminder that aluminium has its own tailings dam issues, a sensitive topic after the devastating dam failure at Vale's Brumadinho iron ore mine. Moreover, aluminium is only as "green" as the power source used to make the stuff, particularly since power is such an important input in the aluminium smelting process.

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