Rusal America signs ‘green’ aluminium contracts in Mexico

Rusal America Corp has secured “green” aluminium supply contracts with two separate Mexican downstream manufacturers, with one being the “greenest” slab contract ever signed in North America, president and chief executive officer Brian Hesse told Fastmarkets on Thursday October 22.

Mexican manufacturers are leading the green aluminium charge in North America, realizing that consumers will start demanding it, he said.

The company has already signed contracts for its low-carbon Allow brand with two separate Mexican downstream aluminium producers, for aluminium slab and billet.

Neither of those contracts include an additional “green” premium on top of the value-added premiums outlined in the deals, Hesse told Fastmarkets.

In June, En+ Group chariman Lord Gregory Barker told Fastmarkets in an interview that a green premium was unlikely to emerge soon.

But Hesse did not discount the possibility of a green aluminium premium emerging in the years to come, predicting that a such a premium could arrive in North America within two to four years.

He also cautioned that the market should not be surprised if a carbon tax for more carbon-intensive aluminium appears one day.

“Sustainabilty is not something that’s here today and gone tomorrow,” Hesse said.

Almexa contract
The first contract, for five years, was signed with Almexa, a Mexico-based downstream producer of products like aluminium foil and sheet. Rusal will supply 20,000 tonnes per year of aluminium slab, beginning in the first quarter of 2021 through 2025 - totaling 100,000 tonnes over that five-year period.

The slab will mainly be supplied to Almexa’s Cuautitlán plant in Mexico City, where the company primarily produces discs for household goods manufacturers.

The metal, part of Rusal’s Allow brand, will be sourced from the Russian parent company’s hydro-powered Taishet smelter in east Siberia, where the smelter’s carbon footprint is roughly 2kg of CO2 per kg of aluminium, Hesse said.

“The material they will be receiving will be some of the greenest slab [used] in North America and will allow them to market that – providing a green solution to their customers,” Hesse said.

Rusal will also supply Almexa’s plant in Veracruz, which is currently under construction and will serve the automotive sector.

Volumes under the current contract will likely increase once that plant ramps up, Hesse said.

“The plant in Veracruz is mainly a scrap-based operation. But we’ll supply that location with the primary slab they need,” he said. “Almexa’s definitely going to grow, and we’ll grow with them.”

Cuprum contract
Rusal America also extended a supply contract with another downstream Mexican producer – Monterrey-based aluminium extruder Cuprum – through the end of 2022 for more than 20,000 tonnes per year of aluminium billet.

On top of this contract, Rusal America will assist Cuprum with producing green extrusions in its casthouse, lending technical and marketing expertise to gain green certifications for the product, Hesse said.

Fastmarkets assessed the aluminium 6063 extrusion billet premium, delivered Midwest US at 7.5-9.5 cents per lb on October 23, up by 6.3% from 7.5-8.5 cents per lb on October 9 and its highest since it was assessed at the same level on October 11, 2019.

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