First choice - green aluminium
“It’s all about choice”, says Matthew Chamberlain, CEO of the London Metal Exchange (LME), when he talks about possible plans for a platform to trade especially low carbon aluminium probably from next year onwards. LME Aluminium, first launched in 1978, has since become the Exchange’s most liquid contract. And the LME is always working with the aluminium industry to develop new ways to serve the market’s hedging and trading needs throughout the value chain. Thus, the wide range of contract types, spanning from a variety of Futures and Options unto LME Minis, is always open for expansion. One of the most recent additions is the LME’s Alumina contract, which enables upstream hedging of inputs for smelters and other alumina consumers.
Together with the existing primary LME Aluminium and the alloy contracts, the LME’s suite of aluminium premium futures provide a one-stop-solution for hedging the all-in aluminium price. Belonging to the Hong Kong Exchange & Clearing Group (HKEX), the LME is much better connected to Asia than most other global exchanges and plays an important role even in the mainland Chinese metal trade - in spite of Shanghai and Shenzhen or partly even in connection with them. The LME’s prompt date structure allows to trade aluminium daily out to three month, weekly out to six month and monthly out to ten years.
“We have now moved on to the next great emerging challenge in metals, which is environmental”, Chamberlain recently told the Financial Times. A new trading platform could help to determine, if consumers were willing to pay a premium for low-carbon aluminium. However, in March this year the LME has signed an agreement to work with the Aluminium Stewardship Initiative (ASI). Since 2017, when Alcoa and Rio Tinto launched their sustainability certification programme as co-founders, a huge number of companies and organisations have signed up to the ASI. Not only huge aluminium companies like the Chinese Chalco, the Norwegian Norsk Hydro or the Russian Rusal-Group joined the ASI as well as smaller firms like the German Trimet S.E. But even more important: a global range of aluminium users support the stewardship, too. Many of the global car manufacturers have signed up to it, even leading German companies like Audi, BMW and Daimler are backing the ASI.
So does Sanjeev Gupta, the Indian born Billionaire and Executive Chairman of his GFG Alliance Group. He has merged all the group’s aluminium production activities in the UK and in France to create his Alvance Aluminium group, headquartered in Paris. The portfolio includes the UK’s only remaining aluminium smelter at Fort Williams in Scotland. Europe’s largest aluminium smelter Alvance Aluminium Dunkerque belongs to Alvance now, which, in France too, owns the engine cast part producers Alvance Aluminium Technologies Poitou and Alvance Cast Products Poitou. In Belgium Alvance just got the EU’s approval to take over the Duffel aluminium rolling facilities. With either Hydro Power like in Scotland and low to zero carbon nuclear power in France, Gupta wants Alvance to become “the new standard bearer for sustainable aluminium production”. Latest in 2030 Alvance should be carbon-neutral. Arnaud de Weert, Chief Executive of Alvance, is “delighted to take the GREENALUMINIUM - business forward and help the automotive and other sectors deliver lighter, greener, more efficient products”.
Author: Katharina Otzen-Odrich / London