Commodity Spotlight | The Vast Potential of Recycled Aluminium

Australia’s decision to ban alumina exports to Russia has increased the price of the metal. The island nation supplies nearly 20 per cent of Russia’s alumina and its exports of aluminium ores, including bauxite, to Russia.

The federal government has been under pressure to stop the export of alumina to Russia. Critics have voiced concerns that it could allow for Australian resources to be used in the manufacture of military ammunition.

Aluminium is used in everything from cans to airplane parts to window frames. It was believed to be running low even before war in Ukraine pushed global commodity markets further into turmoil. This latest development has the potential to add even more inflationary pressure to the global economy.

Aluminium futures are mostly traded on the London Metal Exchange, the New York Mercantile Exchange and the Shanghai Futures Exchange. The standard future contract size is 5 tons. Aluminium is used widely in aerospace applications, packaging, automobiles and railroad cars and as a construction material.

Aluminium production is energy intensive and energy costs globally account for over a third of its average production costs. These smelters sit at the high end of the cost curve, with energy costs comprising a significant chunk of overall production costs.

The biggest producers of aluminium are: The Aluminum Corporation of China, Alcoa and Alumina Ltd, Rio Tinto from Australia, UC Rusal of Russia, Xinfa from China, Norsk Hydro ASA from Norway and South 32 from Australia.

China accounts for nearly 60 percent of global aluminium output. The biggest resources of bauxites, the raw material for aluminium, are located in Australia, China and Guinea. Russia is, in turn, a key supplier of aluminium to markets which include Turkey, China and Japan.

While aluminium has not been targeted by global sanctions, Russian based Rusal, which needs bauxite and alumina to feed its plants – is facing disruption to its supply chains as companies refrain from doing business with Russia.

On Sunday, Australian Prime Minister Scott Morrison announced that Australia would donate coal and further military equipment to Ukraine to “support the brave and courageous resistance” as part of a new aid package that also includes $30 million in emergency humanitarian assistance.

The government announced that it would cease all exports of alumina and aluminium ores, including bauxite, to limit Russia’s ability to produce aluminium, a major Russian export and a critical component in arms and munitions.

Recycling was a low-profile activity until the late 1960s, when the growing use of aluminium beverage cans brought its potential to public awareness. Recovering aluminium through recycling has become an important task of the industry.

Recycling the metal involves melting the scrap, a process that requires only 5% of the energy used to produce aluminium from ore. During the process of recycling, approximately 15% of the input material is lost as dross, an ash-like oxide. An aluminium stack melter produces significantly less dross, with values reported below 1%.

Novelis, which already operates Asia’s largest aluminium recycling centre in Yeongju, South Korea, as well as the world’s largest aluminium recycling centre in Nachterstedt, Germany; is making this investment in additional recycling capacity to meet the growing global demand for sustainable aluminium products.

In January 2022, the company announced it would build a new U.S. recycling centre in Guthrie, Kentucky. The use of recycled aluminium as an input material requires only 5 percent of the energy used to make primary aluminium, thus avoiding 95 percent of the carbon emissions associated with production.

White dross from primary aluminium production and from secondary recycling operations still contain useful quantities of aluminium that can be extracted industrially. The process produces aluminium billets, together with a complex waste material.

This waste material reacts with water, releasing a mixture of gases which spontaneously ignites on contact with air. Contact with damp air results in the release of copious quantities of ammonia gas. Despite these difficulties, the waste is used as a filler in asphalt and concrete.