Aluminium: A New Critical Mineral Frontier

The concept of critical minerals is not new. In fact, the idea emerged in the US prior to the First World War and was formulated in the 1939 Strategic and Critical Materials Stockpiling Act that focused on materials needed to support the defence industry. However, the concept has seen a resurgence due to an increased focus on the materiality of the low-carbon transition, with the deployment of technologies such as solar panels, wind turbines, and electric vehicles potentially requiring large amounts of base metals such as copper and steel, along with relatively high levels of a wide range of niche metals, from neodymium to iridium and dysprosium. This has led to policy action in many parts of the world, including the US, China and the EU.

In early July 2023 the EU amended its list of minerals that it deems critical, adding aluminium to the list under its Critical Raw Minerals Act. These are the materials deemed crucial to Europe’s economy – especially in the context of a materially intensive transition away from fossil fuels. Aluminium is also on the US’s critical minerals list. So why is this material, refined from an ore – bauxite – that is extremely abundant and the second most abundant metallic element on Earth, so critical to the future of the global economy?

Aluminium is an important material for a range of technologies that are projected to play a vital role in the low-carbon transition, being used in the frames of solar photovoltaic (PV) panels, in the chassis of electric cars, and in the nacelles and platforms of wind turbines. The magnitude of the increase in demand from these sources is inherently uncertain as it depends on the scale of deployment of these technologies, the material intensities of the actual technologies deployed, and the scope for recovery and re-use of material from the end-of-life of the equipment involved. However, studies from organisations such as the World Bank and the International Energy Agency have estimated potentially large increases in the demand for the material from these new energy technologies. The scale of the potential demand for aluminium from just a subset of these technologies could be considerable. Lennon et al (2022) estimate that to meet ambitious scenarios and deploy 60 terawatts of solar PV by 2050, up to 486 million tonnes of aluminium could be required up to 2050, compared to a current global annual production of 69 million tonnes.

Aluminium is not just used for these energy transition technologies – in fact, they only make up a small fraction of total demand. It is a vital material across a wide range of sectors, including construction (accounting for approximately 25% of current demand), transportation (including aircraft and electric vehicles, accounting for 23%), electrical items (including a growing use in transmission lines, making up 12%) and other machinery and equipment (11%).

Aluminium is not physically scarce, but that is not the only criteria for thinking that a material might be critical. Bauxite, the main ore from which aluminium is produced, is relatively abundant. In 2022, global production of bauxite was approximately 380 million tonnes, with global identified reserves able to sustain this level for almost 100 years. This production is also relatively diversified, with Australia (26%), China (24%) and Guinea (23%) having the largest shares. However, bauxite is not aluminium, and to obtain the finished metal the ore needs to be first refined into alumina and then smelted into aluminium. The alumina production phase is where concentration in the market starts to occur, with China accounting for 54% of global production in 2022. Within smelting, the concentration increases further, with China smelting 58% of global supply (Figure 1).

Over the last couple of decades there has been a rapid increase in the global capacity for refining and smelting aluminium (Figure 2). This has meant an increase in global supply from around 40 million tonnes in 2008 to 69 million in 2022. However, this increase in capacity has happened almost exclusively in middle-income countries, especially China and India, with the former tripling smelting capacity between 2008 and 2021 and the latter increasing its capacity by over 200%. There has also been considerable investment in new smelting capacity in the Gulf, especially the UAE. In other parts of the world the trend has been the opposite, with smelters mothballing or shutting down – most notably in Brazil – while capacity in other locations, such as Canada and Norway, has flatlined.

Figure 1: Aluminium Production and Smelting Capacity 2022 (Source: USGS)

Figure 2: Aluminium Smelting capacity 2006-2022 (Source: USGS)

A critical aspect of aluminium production, accounting for approximately 30% of costs, is the use of electricity in the Hall–Héroult process that converts alumina to the final metal. The process uses a minimum of 6 kWh of electricity per kg of aluminium and is potentially a large source of emissions, depending on how this electricity is produced. The key aspects that have determined the location of new aluminium smelters are therefore upfront capital costs and access to cheap electricity. It is these factors that have led to the increase in capacity and production in middle-income countries, and the decline in production in higher-cost regions such as North America and Europe.

The difference in how this electricity is produced also has profound implications for the global environment impact of the material. Aluminium that is produced via hydroelectric-generated electricity in countries such as Brazil and Norway (and increasingly in other regions such as China) has an overall footprint that is a degree of magnitude lower than that of aluminium produced using coal-fired electricity, as was traditionally the case in China and India. The global shift of aluminium production to the latter countries has meant that, despite improvements across the industry in terms of electricity use and reducing non-CO2 emissions that arise because of the production process, global average emissions per tonne of aluminium have fallen only slightly over the last decade.

The size of the potential emissions footprint of aluminium production is therefore dependent on a range of factors, including the scale of increase in demand, the location of future aluminium production, and crucially the generation method of the electricity used to power aluminium smelters. Emissions also arise in the Hall–Héroult process itself, as electricity is passed through carbon anodes – although these ‘process’ emissions have reduced in recent years and there are ongoing efforts within the sector to find economic, technologically feasible solutions to eliminate these emissions.

A potential future scenario therefore involves an expansion in global aluminium demand due to high deployment of aluminium-intensive solar PV, which would mainly be met by a supply of relatively emissions-intensive aluminium from China or India. This would create a supply chain that is vulnerable to geopolitical issues and a residual emissions footprint that could undermine some of the gains from switching to renewable energy generation.

A mitigating factor in such a scenario is the capacity for aluminium to be relatively easily and cheaply recycled. Recycled aluminium has the potential to have a carbon footprint 20 times lower than primary aluminium, although this is heavily dependent on where it is assumed that the primary aluminium comes from – for example, if it is from a hydroelectric-intensive producer then the difference could be as low as eight times. The potential exists for a greater role of secondary (recycled) aluminium to help reduce the overall footprint of the industry. The challenge is, however, that aluminium is already heavily recycled, and in some parts of the world, recovery rates are extremely high. Indeed, it is reported by the International Aluminium Institute that Brazil already recycles over 100% of its available scrap – made possible by the role the country plays in importing scrap from around the world. The country now produces more secondary aluminium than primary. Increasing the availability of scrap globally is therefore a key condition of scaling up recycled aluminium. This is often challenging due to the long-lived nature of some of the uses of aluminium, for example in vehicles and in buildings, and also the labour-intensive processes of scrap collection from other uses such as packaging. Improving policy support for sourcing recycled aluminium all along the supply chain is needed to fulfil the potential for secondary aluminium to help in meeting the demands of the low-carbon transition.

The story of aluminium mirrors, in many ways, the situation for a range of the critical minerals required for the low-carbon transition. Particular technological pathways to a low-carbon world could lead to large increases in the demand for the material. This potentially raises environmental and geopolitical issues, along with questions about the speed at which the transition can be achieved and the cost at which technologies can be built and deployed. Ensuring that there is a steady, secure and reliable source of low-emissions, low-environmental impact and cheap aluminium is important to help facilitate a smooth transition to a low-carbon world. But this requires policy action across the supply chain, from incentivising mitigation action within the sector – such as research and development into inert anodes that reduce process emissions – to encouraging greater recycling through circular design and scrap recovery. Helping to create a diverse source of supply, with primary aluminium from a range of geographic regions as well as secondary supply from local regions, will also help to reduce geopolitical and market risks. This requires policy direction regarding sourcing and investment regimes to ensure that smelting capacity is maintained across regions. Overall, what is needed is a holistic approach to ensuring that low-cost, clean aluminium is available in order to facilitate a smooth, low-cost, just transition.

The views expressed in this Commentary are the author’s, and do not represent those of RUSI or any other institution.

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