CRU: More aluminum producers prioritize decarbonization: Industry shift towards sustainability

US Midwest premium steady at the start of December

The US Midwest premium continues to trade between the 18.7–19.2 ¢/lb and little has changed for much of the back half of 2023. The market is still looking ahead to 2024 and working on forecasting when and how quickly demand will return. There are various thoughts floating around that mimic the current macro conversations on hard, soft, or no landing. The health of the overall economy remains not overly negative and GDP growth has surprised to the upside.

Most importantly, the prevailing opinion is that rate hikes have stopped and the cost of borrowing should be at, or near, its peak. This will help overall consumer spending on big ticket, aluminum-intensive items but also reduce the cost of carry. Trading activity has been climbing in recent weeks after months of dormancy, which has helped January’s level firm up to be almost a cent and a half higher than where the market is currently.

Rio Tinto reaffirms decarbonization objectives at investors’ day

On Dec. 5, Rio Tinto held its 2023 Investor Seminar in Sydney, where it updated on progress in its long-term strategy of investing to strengthen operations, deliver growth in a decarbonizing world, and continue to generate attractive shareholder returns.

Rio Tinto’s Chief Executive, Jakob Stausholm, said: “We are making real progress in shaping our portfolio for the future, through entering new markets like recycled aluminum in North America, developments in technology and one of the most exciting exploration pipelines we’ve had for many years.”

Rio Tinto remains committed to meeting its ambitious decarbonization target to halve Scope 1 and 2 emissions by 2030 on the road to net zero by 2050; and a well-defined pipeline of initiatives is indeed progressing. The Group has made project commitments in 2023 which will deliver abatement of around 2 million metric tons of CO2 per year. This includes renewable energy contracts in Australia and Africa, and the transition to 100% renewable diesel at Boron in California in 2023, and at Kennecott in Utah from 2024​. Rio Tinto has updated its total capital guidance on decarbonization from $5 to $6 billion for the period to 2030 (previously ~$7.5 billion), including around $1.5 billion from 2024 to 2026, and weighted to the latter part of the period.

Hydro wins changemaker recognition at COP28

Hydro received recognition from the COP28 UAE presidency as an Energy Transition Changemaker for pioneering the green aluminum transition. The acclaim comes as Hydro makes the push to construct a test facility for the zero-emission HalZero technology, with the aim to start producing by 2025.

HalZero is part of Hydro’s technology roadmap to reduce the emissions associated with aluminum production. Existing electrolysis technology emits CO2 as an inevitable part of the process, but the technology under development is designed to emit oxygen instead of CO2. If successful, HalZero could be implemented in new aluminum smelter capacity around the globe, removing emissions from one of the world’s hard-to-abate sectors.

Rio Tinto acquires 50% of aluminum recycler Matalco

Mining-metal group Rio Tinto has completed a transaction to purchase half of US Aluminum recycling company Matalco from owner, the Giampaolo Group, for $700 million (€638 million), subject to final closing adjustments. The companies will turn Matalco into a 50:50 joint venture. The investment will expand Rio Tinto’s aluminum business in the US, where demand for recycled material is forecast to increase by more than 70% in the decade to 2032, driven by the transportation, construction and packaging sectors, the company said. CEO Jakob Stausholm added: “We look forward to working in partnership with the Giampaolo Group to support the drive to net zero by expanding recycled production and providing closed-loop recycling solutions to help our customers reduce their carbon footprint.”

Norsk Hydro and Padnos collaborate to introduce advanced aluminum sorting technology in the United States

Norwegian aluminum producer Norsk Hydro and Michigan-based recycling firm Padnos have established a 50/50 joint venture called Alusort LLC to implement Hydro’s proprietary sorting technology, HySort, in the United States. The venture aims to industrialize the advanced aluminum sorting technology by installing a Hysort sorting machine at Padnos’ facility in Grandville, Michigan. Production is set to commence next year, with Hydro’s share of the capital investment estimated at around $4 million. The initiative, known as Alusort, seeks to enhance recycling capabilities, reduce emissions, and create value-added, low-carbon products for key aluminum end markets such as automotive, construction, and more.

This article was first published by CRU. Learn more about CRU’s services at www.crugroup.com.