Trafigura launches low-carbon aluminium financing facility
Trafigura Group has formed a low-carbon aluminium financing platform of up to $500 million, it announced on Tuesday September 8.
The platform will enable Trafigura to access financing at a preferential interest rate and, in turn, to pay a premium to low carbon aluminium producers.
Natixis and Rabobank supported the company with the design and structure of this innovative instrument, Trafigura said.
The facility has been designed to meet growing demand from downstream manufacturers for low carbon aluminium and to support upstream producers in their transition to low carbon technologies.
“For aluminium, our objectives are to secure long-term low carbon aluminium supply for our customers to support the efforts of our business partners as they invest in decarbonization and ultimately create efficient links between suppliers and end-users,” Philippe Müller, global head of aluminium and alumina trading at Trafigura, said.
“We’re already seeing increased demand for low carbon aluminium, particularly from the European automotive industry and the packaging industry worldwide,” Müller added.
This follows Trafigura’s establishment of a low carbon aluminium trading desk in 2019, which it was the first commodity trader to do so.
Through this new financing - and in coordination with Natixis and Rabobank - Trafigura has developed a methodology that sets out clear parameters for low-carbon aluminium production, which draws on existing recommendations and standards such as those formulated by the EU Technical Expert Group on Sustainable Finance and the Aluminium Stewardship Initiative (ASI).
Interest in green aluminium has increased rapidly over the past year, with a number of aluminium producers now applying for ASI certification.
While ASI membership levels among traders have also grown significantly, Trafigura has been a member since 2019.
Fastmarkets is currently focusing on attaining price discovery for the low-carbon aluminium sector via a market-wide consultation.
Fastmarkets is seeking feedback on its proposed specifications for low-carbon aluminium, the type of pricing mechanism used to perform price discovery for low-carbon aluminium and the products and locations in which low carbon aluminium should be priced.
To provide feedback on this consultation, or learn more about it, please contact Alice Mason and Justin Yang by email at firstname.lastname@example.org. Please add the subject heading ‘FAO: Alice Mason/Justin Yang, re: Green Aluminium.’