Demand Scenarios for ASI Aluminium
Responsible sourcing expectations are accelerating for a range of commodities, resulting in increasing pressure on suppliers to demonstrate that delivered metal is responsibly sourced, low carbon and/or ‘green’. What are the implications for ‘ASI Aluminium’ demand out to 2030? To answer this question, ASI commissioned CM Group to gather perspectives from industry stakeholders by market sector and region. The resulting report distils findings from more than 75 structured interviews conducted across the global aluminium industry, including 40 within China, and draws on CM Group’s own quantitative estimates and projections.
Overall, the report finds that ASI is expected to play an increasingly influential role this decade in driving positive change in the aluminium sector. However, a principal challenge lies in continuing to address the wide diversity of views across the industry about responsible sourcing, highlighted by fragmented approaches being taken by some market participants. At the same time, multiple stakeholders have evolving assurance needs that seek to address gaps in slow moving or inadequate regulatory frameworks. There is growing interest in chain of custody approaches that segregate by source, but these are still at an early stage of development by a handful of vertically integrated companies. Also emerging is the growing influence of capital markets in driving responsible sourcing behaviour. Much of the industry sees this influence as likely to increase and, as it does, businesses will be required to either comply with capital market certification requirements or face the prospect of higher borrowing costs and limited funding options. These and other insights have informed ASI’s Strategy development for 2022 and beyond.
Key findings in the CM Group report include:
- Most interviewees recognise (and value) the role of independent, third-party certification in driving positive change in the future and see ASI as uniquely positioned to play a major role in driving that change.
- While China’s vast number of aluminium producers and fabricators have a different focus, the interviewees demonstrated a willingness to learn and participate in future, particularly in connection to export markets.
- Many interviewees emphasise that ASI Certification must be aimed at driving positive change along the full value chain, ‘from mine to market’, rather than focused on specific segments or particular sustainability measures alone.
- The strong industry focus on the primary aluminium smelting sector, driven by its highly energy intensive electrolysis process, runs the risk of creating blind spots for other parts of the industry. ASI must capture all relevant ESG issues, not just those attracting attention at any given moment. While some ESG issues may (currently) be seen as intangible, too difficult or less important, over time they are unlikely to remain so.
- Variance in uptake of ASI Certification within and between key market sectors and geographies is likely to remain a feature, given the different local and customer influences and competitive tensions within the sectors.
- Responsible sourcing certifications are likely to play an increasingly important role in capital markets. As they do, there will be opportunities for ASI to integrate its certification program with capital allocation and other project due diligence procedures.
- Similarly, global trading houses are positioning their businesses for strong demand growth in ‘green’ or ‘responsibly sourced’ metal. This will also drive greater transparency in sourcing and the assurances provided by ASI Certification.
- Finally, technologies to transfer and assure the veracity of information are moving fast. They will need to ensure that the data and assurances that populate such systems are relevant, usable and verified.
- Download the CM Group Report “Demand Scenarios for ASI Aluminium”
- Join the 45 Minutes on… webinar on “Future Demand for ASI Aluminium” with CM Group on December 14, 2021.