At the Aluminium Federation (ALFED) House of Lords Lunch Reception, Jonathan Grant, Secretary General of the International Aluminium Institute (IAI), discussed the global outlook for aluminium.
He spoke on the challenges facing the sector including trade, industrial resilience, and sustainability.
He began by outlining how his predecessor, Miles Prosser, who spoke at the event in 2023, had said that the global economic situation at the time was “unlike anything the industry had seen before”.
Prosser had highlighted how governments were working to get their economies back from the impact of Covid-19, climate change was high on the agenda, while interest rates and energy prices were rising sharply.
With the conflict in the Gulf now bringing more disruption to the sector, Grant suggested that many in the industry believed that this level of volatility was the “new normal”.
However, he argued that the scale of the impact on Gulf producers was unprecedented.
He said: “Our production data for April this year showed that aluminium output from the Gulf fell to around 11,000 tonnes per day, which is 40% below the pre-conflict norm of around 18,000 tonnes per day.
“Gulf output is now back at 2013 levels, with little evidence that the decline has bottomed out.”
According to data published by the IAI, the Gulf supplies 19% of the EU’s primary aluminium imports, 28% of Japanese imports, and 21% of US imports.
He continued: “The impact of the conflict is not just a regional production story. It's a slow-motion supply chain shock that's going to affect automotive, aviation, electricity, and construction sectors around the world.”
In addition, the CRU has warned that inventories are at a 19-year low, while LME prices have reached a four-year high at approximately $3,700 a tonne.
While higher prices could benefit producers and recyclers, it could also result in demand destruction and reliance on other materials, such as plastic, steel, or glass.
Decarbonisation and energy transition
Grant said that one of the main contradictions of aluminium is that, despite being an essential material for the global energy transition, it is carbon intensive to produce.
The total emissions from the aluminium sector are over 1.1 billion tonnes of CO2 per year, which is over 14 tonnes of CO2 per tonne of aluminium.
However, data from the IAI showed that global CO2 emissions had remained almost flat since 2019, despite an 18% increase in aluminium production.
Grant said this was driven by greater energy efficiency and recycling, as well as the shift to lower carbon power.
In terms of energy transition, the solar PV sector used approximately 8 million tonnes of aluminium in 2024, suggesting that the move towards low carbon energy would be a substantial driver of aluminium demand in the future.
However, the rapid expansion of solar PV generation has created a scrap management challenge.
While most PV waste is currently in the form of panels damaged during installation, this trajectory will shift as panels from older installations reach the end of their life.
Therefore, cumulative PV waste is projected to reach around 1.7 million tonnes by the early 2030s, which will rise to approximately 60 million tonnes in 25 years’ time.
Grant said: “The biggest challenge facing aluminium circularity and solar PV is not the recycling technology itself.
“It's ensuring that the design, manufacturing, and installation decisions enable recovery and reuse decades from now.”
He believed future progress would depend on improved alloys and stronger product design that allowed for the separation of components, and this would require closer collaboration across the industry.
Policy
Grant said that while government recognition of aluminium as a strategic material was positive, measures to protect domestic industry could be counterproductive from a cost and sustainability perspective.
For example, policies that increase the cost of aluminium products could cause companies to switch to other materials.
Grant said: “More than 60% of aluminium products are traded internationally at least once in the supply chain, and trade barriers, such as tariffs, increase the costs to consumers.”
He outlined the EU’s Carbon Border Adjustment Mechanism (CBAM) as the most prominent example of governments combining climate, industrial, and trade policies.
“While the objective behind CBAM is understandable, governments want to reduce the risk of carbon leakage and support lower carbon industrial production, but how it's implemented will be really important.
“While governments want a resilient domestic supply chain, there's also the risk that increasing fragmentation could reduce efficiency, slow investment, increase costs for consumers, and complicate the global energy transition.”
Grant believed that the choices made over the next decade would determine whether aluminium could fulfil its potential as a material of the future.
