The energy crisis, production caps in China and instability in Guinea push aluminium to a thirteen-year high, while demand from green technology keeps growing.
The price of aluminium has reached its highest level in thirteen years as the worsening energy crisis cut supplies of the metal. Each tonne of aluminium requires about 14 MWh of energy to produce: the aluminium industry is the fifth largest energy consumer in the world. With the sharp rise in energy prices, production costs have therefore risen too.
China and Guinea
A further cause of the price spike is China's decision to cap its future aluminium production capacity in order to curb production-related carbon emissions. With China set to import large volumes of aluminium in the coming years, the rest of the world risks a supply shortage and further price increases. The coup in Guinea has added further pressure: the country holds some of the world's largest bauxite reserves, from which aluminium oxide is produced, and is one of China's main suppliers.
Demand from green technology
At the same time, global demand for aluminium will keep growing with the spread of green technologies: carmakers will use more of it to build lighter, more efficient vehicles, while more aluminium power cables will be needed for offshore wind farms. As a Wood Mackenzie analyst noted, the paradox is that the aluminium industry is not always very green, yet aluminium is needed to decarbonise the economy.