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Aluminum Makers Call for `Green' Trademark to Sell at a Premium

Aluminum Makers Call for `Green' Trademark to Sell at a Premium

  • Rio Tinto, Rusal, Hydro seeing client interest in clean metal
  • `Green' aluminum may help to slow China's aluminum exports

The biggest aluminum producers are discussing the introduction of a “green” trademark for the lightweight metal that could be sold at a premium and encourage carbon footprint reductions among rivals, United Co. Rusal’s deputy chief executive officer said.

“Since many of consumers, such as the car industry, are working on becoming more nature-friendly, the issue of clean aluminum output becomes important," Oleg Mukhamedshin said in an interview last week. As an example, "even if a car with an aluminum body enables lower CO2 emissions, more pollution could have been caused by the company producing that metal, which damages the idea of clean vehicles."

Automakers including Ford Motor Co. are turning to aluminum as they seek to reduce vehicle weights to meet stringent fuel-efficiency requirements. In 2014, Rexam Plc approved a program to cut its cans’ carbon footprint by 25 percent through 2020, the packaging company said in a 2015 report. Energy comprises most of the aluminum industry’s costs, and carbon dioxide generated by fossil fuels such as coal makes up almost 60 percent of global greenhouse-gas emissions, according to the U.S. Environmental Protection Agency.

“The idea discussed by the aluminum industry is to introduce some kind of aluminum trademark, which can be granted to clean-metal products, but they will be sold at a premium,” Mukhamedshin said. “The issue is being discussed with clients as well. This may spur the industry to cut emissions.” Mukhamedshin didn’t elaborate on the size of the premium.

Not Alone

Rusal is not alone with this idea. Rio Tinto Alcan Inc., along with Norsk Hydro ASA and some aluminum consumers including Rexam and Jaguar Land Rover Automotive Plc, set up the Aluminum Stewardship Initiative in 2012 to address industry-specific sustainability challenges, including emissions.

“We are getting more and more interest from customers for low-carbon-footprint aluminum,” Bryan Tucker, a Rio Tinto Alcan spokesman, said by e-mail. “We are already providing this aluminum for a premium for some customers.” About 80 percent of its energy mix is carbon-free, he said.

Norsk Hydro, Europe’s third-biggest aluminum producer, has also seen more interest from its clients in the footprint of its output, spokesman Halvor Molland said by e-mail. The company had 1.63 metric tons of emissions per ton of aluminum production in 2014 and wants to be carbon-neutral by 2020.

Output Reductions

Traditional aluminum-producing countries have cut gross CO2 emission by 39 percent in the last 15 years, Rusal data show. Rusal and companies such as Norsk Hydro emit 4 tons to 6 tons of direct and indirect CO2 for each ton of aluminum it makes, Mukhamedshin said. At the same time, discharges from newer producers such as China, India and the Middle East have increased more than sixfold since 2000. China, the world’s biggest polluter, generating as much as 18 tons of CO2 emissions per ton of metal made, Rusal estimates.

The initiative may be an additional barrier for Chinese aluminum exports into developed countries, said Kirill Chuyko, an analyst at BCS Financial Group. "The green premium can’t be very large -- just several percentage points to the London Metal Exchange price, but it looks like an extra attempt to slow Chinese exports, which became massive this year.”

China accounts for more than 20 percent of greenhouse-gas emissions, according to the U.S. Environmental Protection Agency. While the nation is self-sufficient in aluminum, it boosted exports of the metal this year, creating a market surplus and helping the price to decline 12 percent since the start of 2015 to $1,629.50 a ton by 10 a.m. in London. Rusal estimates that this year’s global aluminum-market surplus may be in a range of 250,000 tons to 280,000 tons, while next year, it will turn to a deficit, Mukhamedshin said.

Rexam’s press service declined to comment. Jaguar and Ford media representatives didn’t answer e-mailed requests for comment.

— With assistance by Agnieszka de Sousa