INTERVIEW: European Aluminium wants to level the playing field for global aluminum recycling

Europe must work on its strategy to keep more aluminum scrap within the region and level the playing field with other global scrap consumers, George Karkampasis, director of Circular Economy and Raw Materials of producer industry body European Aluminium told S&P Global Commodity Insights in a recent interview.

"Recycled aluminum requires only 5% of the energy needed for the primary production, meaning that you can save a lot of energy by recycling aluminum," Karkampasis said. "So, in essence, aluminum scrap is energy in a solid format."

For European Aluminium, keeping scrap within Europe goes hand in hand with one of its core regulatory focuses of safeguarding the sector against the effects of the energy crisis.

Energy accounts for an average of 40% of overall aluminum production costs, according to a European Aluminium report.

Karkampasis argued that exporting scrap material is equivalent to exporting energy, and by utilizing more scrap, producers can reduce the amount of energy needed for production.

"Utilizing more scrap in Europe is a win-win situation, both for meeting decarbonization objectives but also for improving autonomy and competitiveness as a region," he said.

Europe remains net exporter of aluminum scrap

Europe faces many challenges before the objective of maintaining scrap on the continent can be met. Europe is, and has been a net exporter of aluminum scrap since 2002.

In 2023, the EU scrap exports rose 18% year over year to 1.13 million mt, European Aluminum data showed.

The majority of aluminum scrap was destined for non-OECD countries, with 28% of material sent to India alone, according to the data.

"There is a combination of reasons [for the high level of exports]: on the one hand we require certain incremental changes in [European] collection, sorting and pretreatment to make systems more efficient," Karkampasis said.

"But, when we look at the global picture and you compare the European industry to its counterparts, we're continuously facing subsidized over-capacities, meaning that the cost considerations are very different ...there is no such thing as a level playing field."

Leveling environmental standards

Karkampasis argued that a core difficulty is that the EU, with its stringent sustainability objectives, is competing globally with countries that are not subject to the same environmental practices.

For European Aluminium, the key to leveling the playing field is ensuring European environmental legislation is reflected globally.

"The environmental and social legislations that we have in Europe do amount to an administrative burden, which then becomes a monetary cost down the line, and this is something that's not necessarily reflected to other regions in the world," Karkampasis said.

The European Commission has already instigated measures to tackle this, through its revised Waste Shipment Regulation.

The policy, which came into force in May, with provisions applying from May 2027, will require non-EU countries to inform the European Commission that they are willing to import waste and manage it in a sustainable manner.

Moreover, EU companies that export waste outside the EU will have to ensure that their facilities are subject to an independent audit demonstrating that their practices are environmentally sound before the exports can proceed.

"In theory [the Waste Shipment Regulation] should incentivize more scrap to remain in Europe, because we already have the facilities that comply with all the environmental legislation," Karkampasis said.

Looking forward

European Aluminum hopes for a wider European strategy to retain as much scrap as possible.

Karkampasis saw the recent Draghi report, published by European Central Bank president Mario Draghi in September, on the future of European competitiveness as a positive step, particularly its proposal for a single market for waste and improving the circularity of secondary raw materials.

"Europe must concentrate on a strategy to regain as much scrap as possible in Europe," Karkampasis said. "We are just casual about exporting things that can help us here."

Karkampasis offered some other policy initiatives to improve the recycling rate in Europe.

"We're very much also in favor of actually banning landfills for recyclable waste," he said. "So, anything that can be recycled, which is a lot of things beyond aluminum, should not be in landfill.

"What we want to improve as a sector is the quality of recycling to make sure that at the end of life, the scrap quality is as good as possible," Karkampasis said. "So, we minimize any potential losses in our melt, and we can make sure that we maintain a closed material loop to go as close back to the product as possible."

Platts, part of Commodity Insights, last assessed the European high-grade auto-shred price meeting ISRI Twitch specifications at Eur1,710/mt DDP Germany Dec. 6, stable week on week but down from a yearly high of Eur1,890/mt July 15.