Rio Tinto, BMW MoU highlights growing consumer demand for sustainable automotive materials

Growing consumer demand for automotive manufacturers to use sustainable materials is driving the uptake of low-carbon aluminium, with producer Rio Tinto announcing a partnership with BMW Group to supply the metal

The two companies have signed a memorandum of understanding (MoU) to explore how to embed low-carbon aluminium into BMW’s supply chain, under which Rio Tinto will look to provide responsibly sourced aluminium to the BMW’s vehicle production plant in Spartanburg, South Carolina, for use in body components from 2024.

Low-carbon primary aluminium from Rio Tinto’s hydro-powered operations in Canada, combined with recycled content, could generate a reduction of up to 70% in CO2 emissions compared with the BMW Group’s benchmark for aluminium, it said.

Rio Tinto’s carbon-free smelting technology for aluminium enables the production of metal without direct carbon dioxide emissions during the smelting process, instead emitting pure oxygen.

“The agreement to supply low-carbon aluminium is based on several pillars: in addition to hydroelectric power and secondary material, we also want to lead the automotive industry by ramping up our use of aluminium with no direct CO2 emissions from the smelting process,” Joachim Post, responsible for Purchasing and Supplier Network at BMW, said.

In response to the growing aluminium sustainability sector, Fastmarkets launched low-carbon aluminium differentials for primary aluminium and value-added products to provide more transparency in the market.

Fastmarkets’ monthly assessment of the aluminium low-carbon differential, value-added product, Europe was $5-25 per tonne on February 3, widening up from $5-15 per tonne at its launch in March 2021.

Consumer interest in sustainability and the emissions profile of the materials used to build their cars is growing, with producers developing and offering new products to meet this demand. BMW also has green metal agreements with aluminum producer EGA to be used at its Plant Landshut in Germany.

What to read next
The rising interest for low-carbon primary aluminium within East Asia is clear, although its ability to command a premium remains uncertain, according to market participants
Read more about how we are responding to growing demand for green metal in Japan and South Korea
Fastmarkets has discontinued its aluminium low-carbon differential value-added product, Europe, as of Friday March 1, 2024.
Fastmarkets is launching a low-carbon primary aluminium differential, Japan, South Korea to complement its existing premiums in East Asia and to meet market interest in a low-carbon aluminium pricing mechanism.
An ongoing disruption to trade via the Red Sea and recent strength in some Asian markets are providing support to aluminium premiums across Europe, despite a continued period of low regional demand, participants have told Fastmarkets
Aluminium and nickel appear to have once again escaped inclusion in the latest list of sanctions imposed by western governments on Russia, ending days of speculation that increased both the prices and the traded volumes of the metals.