Australian aluminum sector backs $1.2 bil government plan to go "green"

Australian aluminum sector is backing the government's A$2 billion ($1.24 billion) credit plan to fast-track the domestic aluminum industry's conversion to produce green aluminum.

The "Green Aluminium Production Credit" will be made available over 2028-2029 and eligible facilities will get "support for every tonne of clean, reliable Australian-made aluminum they make over a period of 10 years," the Department of Industry, Science and Resources said Jan. 20.

The credits are expected to be implemented via contracts with the three domestic producers, namely Alcoa, Rio Tinto and Tomago Aluminium.

"Today's announcement is an important step in support of the industry's transition to the competitive, reliable, lower-carbon energy needed for the aluminum industry to secure a sustainable future," said Marghanita Johnson, the council's CEO.

"As global industrial customers and consumers increasingly focus on low-carbon products, this support signals Australia's potential to be a major supplier of the aluminum needed for the global energy transition, creating a foundation for local businesses and manufacturing to thrive," Kellie Parker, Rio Tinto's CEO, said.

"We are at the very centre of Australian manufacturing, providing nearly 600,000 tonnes of aluminum each year right here in the Hunter region," said Jerome Dozol, CEO of Tomago. "This sits in line with our firm commitment to decarbonize our aluminum smelting operations by 2035."

Market participants in Asia have shared that although not all end consumers were readily receptive to premiums for low-carbon products in the market, there have been increased consumer inquiries and buying interest from some.

"We are keeping a close watch on low-carbon premiums in the market, although we are not trading (low-carbon)," said a trader, adding that there was a high possibility they would be in the near term.

Following increased interest in low-carbon products in the region, Platts, part of S&P Global Commodity Insights, launched daily low-carbon aluminum premium (LCAP) assessments for Japan and Asia, and corresponding all-in calculations based on underlying spot and quarterly contract prices, effective Jan. 2.

Platts assessed the CIF main Japanese ports spot low-carbon aluminum premium for 99.7% P1020/1020A aluminum ingot unchanged but up $11/mt at $41/mt plus CIF Japan Spot Premium and London Metal Exchange cash Jan. 17 since its launch Jan. 2. Platts CIF main Asian ports spot low-carbon aluminum premium for 99.7% P1020/1020A aluminum ingot were assessed at parity.

Also, Platts assessed alumina FOB Australia down $29/mt from Jan. 16 at $570/mt on Jan. 17.

Market participants generally saw a downtrend in alumina trade prices and tradable levels amid the increasing availability of spot cargoes.

Rio Tinto said the government's announcement builds on the company's "partnership with the Queensland Government, announced in August 2024, to support Boyne Smelters Ltd.'s transition to renewable energy, as well as Rio Tinto's strong progress in securing renewable power to provide competitively priced electricity for its aluminum operations."

Australia is the world's sixth largest aluminum producer, with four aluminum smelters operating domestically. The country's overall primary aluminum output is expected to remain stable at 1.6 million mt/year, according to data from the department.