‘Green’ alumina can command a premium, producers say

Sustainability remains a key topic in the aluminium market, and with many producers already selling low-carbon aluminium units the focus has shifted upstream to producing low-carbon alumina.

“There is value [in low-carbon alumina assets] and we are already seeing that in our product,” Kelly Thomas, chief commercial officer at Alcoa, said.

“We’re seeing a threefold increase in volume with premiums associated with that, so clear the world sees the value of more sustainable products and I think that’ll continue to grow,” Thomas added.

In September 2020, Alcoa launched its first low-carbon smelter-grade alumina brand, EcoSource, produced with no more than 0.6 tonnes of CO2 equivalents (CO2e) per tonne of alumina.

“This isn’t a profit-margin grab; this is something that is critical to our future,” Thomas said. “We’re going to do everything we can to drive down the cost but there’s value in what we’re doing, and I think the world sees that.”

The company also recently announced that the Australian government has provided $7.7 million of funding toward pilot trials on a new carbon-reduction technology for alumina refining.

John Thuestad, executive vice president at Hydro, also said he was confident that the market will value high-quality products.

“To me, I think it is an opportunity, there could be cost-efficient solutions where the market sets the price anyway. Hopefully, we’ll see the customers valuing the units,” Thuestad said.

“I’m optimistic on getting a decent price by the market and getting a fair price for high-quality product,” he added.

Alcoa and Hydro both produce low-carbon aluminium brands for both primary aluminium and value-added products.

Fastmarkets currently prices low-carbon aluminium differentials in these markets that bring transparency to the market.

The aluminium low-carbon differential P1020A, Europe, was assessed at $0-15 per tonne on April 1.

But further down the supply chain, value-added products such as billet and primary foundry alloys are already commanding a higher premium.

Fastmarkets assessed the aluminium low-carbon differential, VAP, Europe, at $20-35 per tonne on April 1. The differentials will next be assessed on May 6.