1 00:00:00,200 --> 00:00:02,880 Speaker 1: This is Dan of Perkins and you're listening to Switched 2 00:00:02,960 --> 00:00:06,680 Speaker 1: on the BNAF podcast. I'm sure you're familiar with drinks 3 00:00:06,720 --> 00:00:09,080 Speaker 1: cans and aluminum foil to wrap your food, But then 4 00:00:09,119 --> 00:00:12,119 Speaker 1: what about the aluminum used in lightweighting of vehicles and 5 00:00:12,160 --> 00:00:16,000 Speaker 1: of course in batteries. BNAF sees aluminum demand going up 6 00:00:16,079 --> 00:00:19,000 Speaker 1: in the future, and our Global Aluminum Outlook expects to 7 00:00:19,000 --> 00:00:22,640 Speaker 1: see this demand increase by seventy seven percent between twenty 8 00:00:22,680 --> 00:00:26,640 Speaker 1: twenty two and twenty forty. According to the US Geological Survey, 9 00:00:26,680 --> 00:00:30,240 Speaker 1: it's the second most abundant metal element in the Earth's crust, 10 00:00:30,280 --> 00:00:33,720 Speaker 1: second only to silicon, and the second most used metal 11 00:00:33,920 --> 00:00:36,680 Speaker 1: next to iron. So what's not to love? Well, it 12 00:00:36,720 --> 00:00:39,159 Speaker 1: falls into the hard to abate category. So why is 13 00:00:39,200 --> 00:00:41,600 Speaker 1: it hard to abate? And what are the processes involved 14 00:00:41,600 --> 00:00:44,120 Speaker 1: in its production? And how does this compare with other 15 00:00:44,200 --> 00:00:47,320 Speaker 1: metals in terms of emissions. Given it's well known for 16 00:00:47,400 --> 00:00:50,199 Speaker 1: being infinitely recyclable, we also want to know what the 17 00:00:50,240 --> 00:00:52,519 Speaker 1: conditions are that are right to keep it in the 18 00:00:52,520 --> 00:00:56,480 Speaker 1: circular economy. In today's episode, we welcome back BNF's Head 19 00:00:56,480 --> 00:00:59,960 Speaker 1: of Metals in Mining, doctor Quasimpofo. Together we discuss a 20 00:01:00,120 --> 00:01:03,560 Speaker 1: range of topics, including the wide role aluminum plays across 21 00:01:03,600 --> 00:01:06,760 Speaker 1: a number of industries, including automotive and clean energy, the 22 00:01:06,840 --> 00:01:11,000 Speaker 1: differences between the primary production and recycling processes and the 23 00:01:11,040 --> 00:01:15,280 Speaker 1: definition of green aluminum, the global supply chain behind aluminum 24 00:01:15,400 --> 00:01:19,360 Speaker 1: it's production and exports, and how current geopolitical issues including 25 00:01:19,400 --> 00:01:22,640 Speaker 1: the Carbon Border Adjustment Mechanism or seabaand for short, could 26 00:01:22,640 --> 00:01:25,920 Speaker 1: affect the sector. As always, if you like this podcast, 27 00:01:26,080 --> 00:01:29,280 Speaker 1: make sure to subscribe to receive updates on future episodes 28 00:01:29,280 --> 00:01:31,880 Speaker 1: on your device, and consider giving us a review on 29 00:01:31,959 --> 00:01:35,200 Speaker 1: Apple Podcasts or Spotify to make us more discoverable by others. 30 00:01:35,520 --> 00:01:49,600 Speaker 1: And now let's go to my conversation with Quasyquaisy. Thank 31 00:01:49,640 --> 00:01:50,960 Speaker 1: you for joining us on the show today. 32 00:01:51,160 --> 00:01:53,360 Speaker 2: Thank you Dana for having me once again, says some 33 00:01:53,480 --> 00:01:54,120 Speaker 2: ground roles. 34 00:01:54,320 --> 00:01:56,880 Speaker 1: Is it going to be aluminum or aluminium? 35 00:01:57,240 --> 00:01:58,280 Speaker 2: Let's go the American way. 36 00:01:58,680 --> 00:02:01,280 Speaker 1: We're going to go with aluminum. Yes, aluminum it is. 37 00:02:01,400 --> 00:02:03,960 Speaker 1: So let's actually do a little bit of background on 38 00:02:04,000 --> 00:02:06,720 Speaker 1: aluminum and where it's used. Now, obviously people are going 39 00:02:06,800 --> 00:02:10,200 Speaker 1: to associate it with maybe their can of soda and 40 00:02:10,720 --> 00:02:12,960 Speaker 1: see it from the consumer end of things, but it's 41 00:02:12,960 --> 00:02:17,600 Speaker 1: actually an extraordinarily useful and increasingly in demand metal in 42 00:02:17,639 --> 00:02:20,520 Speaker 1: the energy transition. So can you give me just a 43 00:02:20,520 --> 00:02:25,200 Speaker 1: little bit of information regarding the current use cases for aluminum. 44 00:02:25,240 --> 00:02:27,120 Speaker 2: I think before we talk about the current I just 45 00:02:27,160 --> 00:02:29,160 Speaker 2: wanted you to take you on the journey of history. 46 00:02:29,400 --> 00:02:31,480 Speaker 2: And you know it would amaze you to think that 47 00:02:31,600 --> 00:02:34,359 Speaker 2: a couple of hundred years ago, if a guest visited 48 00:02:34,400 --> 00:02:36,560 Speaker 2: you a home and you wanted to bring out your 49 00:02:36,639 --> 00:02:39,800 Speaker 2: best cookin wear to serve your muss VIP guest, it 50 00:02:39,800 --> 00:02:42,280 Speaker 2: would be an aluminum plate and then you would give 51 00:02:42,280 --> 00:02:44,720 Speaker 2: the gold plates to the average guests. 52 00:02:45,000 --> 00:02:47,160 Speaker 1: Wow, where were they getting the aluminum? And certainly they 53 00:02:47,200 --> 00:02:49,799 Speaker 1: weren't doing the smelting that we're doing today exactly. 54 00:02:49,880 --> 00:02:53,280 Speaker 2: So that's just precisely why aluminum back then was seen 55 00:02:53,320 --> 00:02:56,400 Speaker 2: as a luxury product because of the smelting, the costs 56 00:02:56,560 --> 00:02:59,560 Speaker 2: required to obviously process the box site, which we'll talk 57 00:02:59,560 --> 00:03:03,040 Speaker 2: about fully later into aluminum. And what we realize is 58 00:03:03,040 --> 00:03:07,200 Speaker 2: that ultimately when technology made the smelting of aluminum a 59 00:03:07,280 --> 00:03:10,919 Speaker 2: cheaper process, hence aluminum becoming a cheaper product, it became 60 00:03:11,280 --> 00:03:14,520 Speaker 2: that every day use plate or silverware so to speak, 61 00:03:14,600 --> 00:03:16,800 Speaker 2: that you house your guest with. But it's just interesting. 62 00:03:16,840 --> 00:03:18,720 Speaker 2: I wanted to take you back and to answer your 63 00:03:18,800 --> 00:03:21,280 Speaker 2: question what is the current use case for aluminum? And 64 00:03:21,320 --> 00:03:23,640 Speaker 2: I tend to say that it's actually one of the 65 00:03:23,680 --> 00:03:26,639 Speaker 2: most used metals. And you talk about the energy transition, 66 00:03:26,680 --> 00:03:29,360 Speaker 2: which obviously is one important key factor, But then in 67 00:03:29,480 --> 00:03:33,640 Speaker 2: terms of the demand construction, almost every major building would 68 00:03:33,639 --> 00:03:36,960 Speaker 2: have some pieces of aluminum in there. Every modern vehicle 69 00:03:37,120 --> 00:03:39,360 Speaker 2: would have some pieces of aluminium in there. And you 70 00:03:39,400 --> 00:03:42,280 Speaker 2: talk about the infamous famous cans, Coca coula cans or 71 00:03:42,280 --> 00:03:44,600 Speaker 2: Pepsi cans or whatever can it is, there is also 72 00:03:44,680 --> 00:03:47,600 Speaker 2: an aluminum there. So if we look around US, aluminum 73 00:03:47,600 --> 00:03:51,960 Speaker 2: plays a very important role in everyday life, including food packaging. 74 00:03:52,200 --> 00:03:55,000 Speaker 1: And is this because it's inexpensive or because of some 75 00:03:55,040 --> 00:03:56,600 Speaker 1: of the unique properties of the metal. 76 00:03:56,920 --> 00:04:00,320 Speaker 2: Obviously unique properties come first, because if you're thinking, of course, 77 00:04:00,440 --> 00:04:03,560 Speaker 2: compared to something like plastic, plastic is cheaper and alumnum 78 00:04:03,560 --> 00:04:05,960 Speaker 2: would obviously be more expensive. But then it come down 79 00:04:06,040 --> 00:04:08,600 Speaker 2: to its qualities in terms of the unique next. But 80 00:04:08,640 --> 00:04:11,960 Speaker 2: then most importantly I think the weight. Imagine having your 81 00:04:12,000 --> 00:04:14,640 Speaker 2: Coca cola made of steel, the extra weight that you 82 00:04:14,680 --> 00:04:17,640 Speaker 2: would have to accommodate in terms of transporting it from 83 00:04:17,640 --> 00:04:19,840 Speaker 2: one point to the other, or even just holding it 84 00:04:19,880 --> 00:04:24,320 Speaker 2: in your palm. So above all else, beyond its unique characteristics, 85 00:04:24,320 --> 00:04:26,440 Speaker 2: like you rightly mentioned, is a light weight that it 86 00:04:26,440 --> 00:04:28,040 Speaker 2: comes with that makes it very unique. 87 00:04:28,080 --> 00:04:30,039 Speaker 1: So I'm thinking it might be used for lightweighting for 88 00:04:30,080 --> 00:04:32,800 Speaker 1: a number of things you're mentioning consumer products. I certainly 89 00:04:32,839 --> 00:04:36,960 Speaker 1: see the use case within vehicles. Is that a reason 90 00:04:37,200 --> 00:04:41,880 Speaker 1: for kind of future application the lightweighting potential, Actually, I. 91 00:04:41,839 --> 00:04:44,360 Speaker 2: Would say it's not even future, it's a current application. 92 00:04:44,480 --> 00:04:47,560 Speaker 2: And I think historically it's important to understand that there 93 00:04:47,560 --> 00:04:50,919 Speaker 2: are two ways autocoons can improve the efficiency of a vehicle. 94 00:04:51,160 --> 00:04:53,680 Speaker 2: So one either you get a bigger range in so 95 00:04:53,720 --> 00:04:56,640 Speaker 2: you can go faster, or you maintain the engine size 96 00:04:56,720 --> 00:04:59,680 Speaker 2: and reduce the weight of the car to optimize the cast. 97 00:04:59,720 --> 00:05:03,080 Speaker 2: Before and like I said, backward internal combusting engine, the 98 00:05:03,160 --> 00:05:05,800 Speaker 2: use case was not really predominant. But then the moment 99 00:05:05,880 --> 00:05:09,120 Speaker 2: you come down to battery electric vehicle, the battery itself 100 00:05:09,279 --> 00:05:11,320 Speaker 2: is a very heavy product. And what you're trying to 101 00:05:11,360 --> 00:05:15,440 Speaker 2: do if we are thinking of increasing the range of vehicles, 102 00:05:15,520 --> 00:05:19,200 Speaker 2: which in North American market is a very important distinguishing 103 00:05:19,279 --> 00:05:22,360 Speaker 2: factor between two electric vehicles you have two options there. 104 00:05:22,520 --> 00:05:25,480 Speaker 2: You can either keep investing in better batteries that are 105 00:05:25,560 --> 00:05:28,120 Speaker 2: denser that will give you more range, or you can 106 00:05:28,160 --> 00:05:31,280 Speaker 2: maintain the battery and then reduce the size of the car. 107 00:05:31,400 --> 00:05:34,080 Speaker 2: And what automakers actually come in to realize is that 108 00:05:34,200 --> 00:05:36,760 Speaker 2: you can actually use aluminum for the body of the 109 00:05:36,839 --> 00:05:40,640 Speaker 2: vehicles to significantly reduce weight, but then probably get similar 110 00:05:40,640 --> 00:05:43,640 Speaker 2: results than you do in using steel at a cheaper cost. 111 00:05:43,880 --> 00:05:48,320 Speaker 1: So before we get into really this outlook for increased 112 00:05:48,320 --> 00:05:50,800 Speaker 1: demand going forward, let's just take a moment for you 113 00:05:50,839 --> 00:05:53,080 Speaker 1: to paint a picture in my mind of what the 114 00:05:53,120 --> 00:05:57,320 Speaker 1: production process actually looks like and why this particular metal 115 00:05:57,360 --> 00:06:00,560 Speaker 1: falls into the hard to abate sector and it's considered 116 00:06:00,720 --> 00:06:04,400 Speaker 1: extremely carbon intensive. Will you tell me if I'm walking 117 00:06:04,520 --> 00:06:07,279 Speaker 1: up to this, first of all, what's the size, what's 118 00:06:07,320 --> 00:06:10,880 Speaker 1: the scale, and what's actually happening in an aluminum production facility. 119 00:06:11,040 --> 00:06:13,279 Speaker 2: It's quite an interesting one. So it's a metal that 120 00:06:13,400 --> 00:06:17,120 Speaker 2: goes through about three stages. So first, just like every 121 00:06:17,160 --> 00:06:19,479 Speaker 2: other metal, you need to get it one way or 122 00:06:19,480 --> 00:06:21,919 Speaker 2: the other from the ground. And aluminum is one of 123 00:06:21,960 --> 00:06:25,400 Speaker 2: the few metals that is not actually free in nature, 124 00:06:25,520 --> 00:06:27,520 Speaker 2: and by that I mean you're not going to go 125 00:06:27,520 --> 00:06:30,839 Speaker 2: into a mine and see aluminum just lying there onlike gold. 126 00:06:31,040 --> 00:06:34,520 Speaker 2: So hence my initial historical fact about the fact that 127 00:06:34,720 --> 00:06:36,760 Speaker 2: aluminium was expensive because they had to go through a 128 00:06:36,760 --> 00:06:38,920 Speaker 2: couple of processes. So you go to a mine and 129 00:06:39,000 --> 00:06:41,720 Speaker 2: you discover what we call box site. So box side 130 00:06:41,800 --> 00:06:45,719 Speaker 2: is an element on its own, free in nature, abandant 131 00:06:45,760 --> 00:06:49,120 Speaker 2: in countries like obviously Australia or China or Guinea. 132 00:06:49,160 --> 00:06:51,720 Speaker 1: So we're not worried about how much box site there 133 00:06:51,760 --> 00:06:53,120 Speaker 1: is out there, not at all. 134 00:06:53,200 --> 00:06:55,440 Speaker 2: The tricking point in the supply chain is not the appstream, 135 00:06:55,440 --> 00:06:57,760 Speaker 2: which is a box site. So you go on the mine, 136 00:06:57,800 --> 00:06:59,960 Speaker 2: you get the box site, and then you process it 137 00:07:00,080 --> 00:07:03,320 Speaker 2: into a product called alumna and which is an intermediary product, 138 00:07:03,480 --> 00:07:06,560 Speaker 2: and ultimately you're able to convert that alumina into aluminium. 139 00:07:06,600 --> 00:07:09,159 Speaker 2: But then, I know, it sounds very simple, sounds like 140 00:07:09,200 --> 00:07:12,920 Speaker 2: three words. But in theory between conversion of box side 141 00:07:12,920 --> 00:07:16,320 Speaker 2: to aluminum, do you're looking at a temperature of about 142 00:07:16,440 --> 00:07:19,400 Speaker 2: over one thousand degrees celsius And for most of our 143 00:07:19,440 --> 00:07:22,559 Speaker 2: listeners that sounds like a very abstract number. But Dana, 144 00:07:22,600 --> 00:07:25,360 Speaker 2: have you ever been close to an active volcano? No? 145 00:07:25,560 --> 00:07:28,160 Speaker 1: Although no, no, Actually, I don't have any interest in 146 00:07:28,240 --> 00:07:30,520 Speaker 1: doing that, but yeah, sure no, if you. 147 00:07:30,480 --> 00:07:33,120 Speaker 2: Did, you would realize that an active accounto the temperature 148 00:07:33,120 --> 00:07:36,040 Speaker 2: of an active volcano is mostly between a thousand to 149 00:07:36,040 --> 00:07:38,960 Speaker 2: two thousand, So in order to convert box side into 150 00:07:39,000 --> 00:07:42,000 Speaker 2: the aluminum that we see in our coca cola or pepsicants, 151 00:07:42,160 --> 00:07:45,520 Speaker 2: you would need temperatures close to what an active volcano 152 00:07:45,720 --> 00:07:48,720 Speaker 2: actually is. And then the question is how much energy 153 00:07:49,240 --> 00:07:52,360 Speaker 2: do you actually need to get temperatures of an active 154 00:07:52,400 --> 00:07:55,040 Speaker 2: volcano in order to convert box side to aluminium. 155 00:07:55,080 --> 00:07:58,360 Speaker 1: And presumably this temperature needs to be maintained in the 156 00:07:58,360 --> 00:08:01,600 Speaker 1: facility for the deray of production. And it's not like 157 00:08:01,640 --> 00:08:03,760 Speaker 1: we go home at night, turn off the light, you know, 158 00:08:03,920 --> 00:08:06,480 Speaker 1: a thousand degrees down, let's go to zero, and then 159 00:08:06,520 --> 00:08:08,520 Speaker 1: come back the next morning and do it all over again. 160 00:08:08,560 --> 00:08:11,240 Speaker 2: Precisely so, And it's actually one of the few processes 161 00:08:11,280 --> 00:08:13,840 Speaker 2: where you cannot have a downtime because the moment you 162 00:08:13,880 --> 00:08:18,080 Speaker 2: do whatever material you have in the smelter solidifies, the 163 00:08:18,120 --> 00:08:20,560 Speaker 2: moment the temperature drops, like you rightly mentioned, and you 164 00:08:20,680 --> 00:08:23,400 Speaker 2: probably have to spend a couple of billions building that 165 00:08:23,520 --> 00:08:26,520 Speaker 2: whole smelter or refine your facility again, so there's no 166 00:08:26,600 --> 00:08:29,080 Speaker 2: sleep days. When you produce an aluminum you charge it 167 00:08:29,120 --> 00:08:31,760 Speaker 2: at a thousand, and you have to stay consistent with that. 168 00:08:32,040 --> 00:08:36,120 Speaker 1: Now, is the aluminum produced typically near where companies are 169 00:08:36,160 --> 00:08:38,400 Speaker 1: going to be using it? Or is this something that 170 00:08:38,520 --> 00:08:41,760 Speaker 1: has a massive global supply chain and is shipped everywhere. 171 00:08:42,120 --> 00:08:45,080 Speaker 2: So the biggest driver for where you're going to find 172 00:08:45,080 --> 00:08:48,240 Speaker 2: an aluminum plant, it's obviously where you get cheap energy. 173 00:08:49,200 --> 00:08:52,040 Speaker 2: So unlike other commodities, say battery, where you want to 174 00:08:52,080 --> 00:08:54,600 Speaker 2: take it closer to where you produce it. Historically the 175 00:08:54,640 --> 00:08:57,960 Speaker 2: biggest driver because like I said, to be able to 176 00:08:58,080 --> 00:09:01,400 Speaker 2: crank up a smelter to temper of an active volcanol, 177 00:09:01,440 --> 00:09:03,920 Speaker 2: you need a lot of energy. So historically we've seen 178 00:09:04,080 --> 00:09:08,000 Speaker 2: that aluminum refineries and smelterts move closer to places where 179 00:09:08,000 --> 00:09:10,520 Speaker 2: they can get cheap energy. And in the twentieth century, 180 00:09:10,640 --> 00:09:14,040 Speaker 2: one of the cheap energy sources was obviously hydro electric power. 181 00:09:14,120 --> 00:09:16,959 Speaker 2: So you can find in Scandinavian countries, in New Zealand, 182 00:09:17,040 --> 00:09:21,480 Speaker 2: in Canada, or countries where mostly there are very reliable 183 00:09:21,559 --> 00:09:24,720 Speaker 2: and dependable hydro electric power, we find the aluminum production 184 00:09:24,840 --> 00:09:25,920 Speaker 2: moving there as well. 185 00:09:26,240 --> 00:09:29,360 Speaker 1: Now, the way that you've described a plant really doesn't 186 00:09:29,400 --> 00:09:31,959 Speaker 1: trigger to me that there is going to be much 187 00:09:31,960 --> 00:09:34,800 Speaker 1: of a difference from an energy and intensity standpoint for 188 00:09:35,400 --> 00:09:40,600 Speaker 1: raw aluminum versus recycled aluminum. Is there from a production 189 00:09:40,720 --> 00:09:44,559 Speaker 1: standpoint a big benefit of using recycled aluminum when we're 190 00:09:44,559 --> 00:09:46,560 Speaker 1: thinking about emissions, So there's. 191 00:09:46,480 --> 00:09:49,439 Speaker 2: A lot of benefits there. And from an energy perspective, 192 00:09:49,600 --> 00:09:52,880 Speaker 2: if you decided to get your aluminum from a recycled source, 193 00:09:53,000 --> 00:09:57,040 Speaker 2: you use fifteen times less energy twenty two times less emissions. 194 00:09:57,120 --> 00:09:59,200 Speaker 2: Now that is a big winner if you care about 195 00:09:59,280 --> 00:10:01,680 Speaker 2: environment like you and I do. And so what we're 196 00:10:01,720 --> 00:10:05,120 Speaker 2: seeing is that companies are actually when they go to 197 00:10:05,559 --> 00:10:09,240 Speaker 2: their suppliers, they don't first ask can you produce aluminum 198 00:10:09,280 --> 00:10:11,400 Speaker 2: from primary sources? First? For us, they actually want to 199 00:10:11,440 --> 00:10:14,480 Speaker 2: know how much talk of recycled aluminum you have, and 200 00:10:14,520 --> 00:10:16,920 Speaker 2: I would prefer to buy that first before we talk 201 00:10:16,960 --> 00:10:20,360 Speaker 2: about primary So, yes, there's a use case if you 202 00:10:20,440 --> 00:10:24,080 Speaker 2: care about the environment for recycled aluminum. But then it's 203 00:10:24,080 --> 00:10:28,000 Speaker 2: not just about the energy and then the emissions intensity 204 00:10:28,040 --> 00:10:30,839 Speaker 2: that is lower. Let's take a country like China. Last year, 205 00:10:30,960 --> 00:10:33,760 Speaker 2: China produced about forty two million tons of the commodity 206 00:10:33,800 --> 00:10:35,960 Speaker 2: which is close to about fifty percent of what's produced 207 00:10:36,040 --> 00:10:38,280 Speaker 2: last year. What we know in China is that over 208 00:10:38,320 --> 00:10:41,880 Speaker 2: the last ten years production has increased quite significantly. However, 209 00:10:42,080 --> 00:10:45,160 Speaker 2: Beijing has set a target that you cannot go more 210 00:10:45,200 --> 00:10:49,559 Speaker 2: than forty five million for primary production. So China's smelters 211 00:10:49,559 --> 00:10:52,720 Speaker 2: and refineries only have three million more of runway in 212 00:10:52,800 --> 00:10:55,520 Speaker 2: terms of capacity increase for primary aliminum. So what is 213 00:10:55,559 --> 00:10:58,040 Speaker 2: going to happen over the next five years in China 214 00:10:58,160 --> 00:11:01,400 Speaker 2: where the largest aluminum is producer, We think that the 215 00:11:01,480 --> 00:11:04,960 Speaker 2: switch to secondary aluminum is going to happen quicker and sooner. 216 00:11:05,160 --> 00:11:08,120 Speaker 1: So when it comes to the term green aluminum, is 217 00:11:08,120 --> 00:11:10,520 Speaker 1: it predominantly recycled or does it have to do more 218 00:11:10,679 --> 00:11:13,480 Speaker 1: with the energy source that's actually powering the facility? 219 00:11:13,800 --> 00:11:16,959 Speaker 2: So green aluminum is actually the end product. So I 220 00:11:17,360 --> 00:11:20,240 Speaker 2: would like to say green aluminium is technology agnostic, But 221 00:11:20,280 --> 00:11:24,520 Speaker 2: then it's practically difficult, even not impossible, to rely on 222 00:11:24,679 --> 00:11:27,520 Speaker 2: primary aluminum in order to achieve green aluminum, because then 223 00:11:27,520 --> 00:11:30,920 Speaker 2: it becomes even with secondary even with recycle, it's not 224 00:11:31,200 --> 00:11:34,040 Speaker 2: entirely green. You still probably need to rely on some offset. 225 00:11:34,200 --> 00:11:37,160 Speaker 2: So I would say that green aluminum the easiest route 226 00:11:37,200 --> 00:11:40,200 Speaker 2: if a company is thinking about green aluminum would be 227 00:11:40,400 --> 00:11:44,880 Speaker 2: to probably rely on secondary sources which requires less energy, 228 00:11:45,000 --> 00:11:49,000 Speaker 2: which requires obviously less associated with less emissions and potentially 229 00:11:49,080 --> 00:11:52,320 Speaker 2: cheaper and where you still have some emissions associated with 230 00:11:52,360 --> 00:11:54,600 Speaker 2: the supply chain, off sets play a key role in 231 00:11:54,679 --> 00:11:57,160 Speaker 2: order to deliver those green aluminum and then we are 232 00:11:57,160 --> 00:12:00,320 Speaker 2: seeing that actually happen. I think Apple has established an 233 00:12:00,360 --> 00:12:02,560 Speaker 2: off take agreement with Rio Tinto. I think the next 234 00:12:02,600 --> 00:12:06,119 Speaker 2: Presso has also made some announcements about using green aluminum 235 00:12:06,160 --> 00:12:09,520 Speaker 2: for its cupsules coffee cupsules, So there's a use case 236 00:12:09,520 --> 00:12:11,960 Speaker 2: for it, but that is still on the fringes of 237 00:12:12,120 --> 00:12:16,480 Speaker 2: the main supply demand market. Hopefully, with time, as policies 238 00:12:16,600 --> 00:12:20,559 Speaker 2: that encourages and enforces the emission reduction of the HAW 239 00:12:20,559 --> 00:12:23,760 Speaker 2: TWA base sectors come into play, we could potentially see 240 00:12:23,840 --> 00:12:25,800 Speaker 2: green aluminum entering the mass market. 241 00:12:25,960 --> 00:12:29,160 Speaker 1: So green aluminum as the end product is going to 242 00:12:29,160 --> 00:12:31,720 Speaker 1: be comprised of some recycled materials, and we'll come to 243 00:12:31,720 --> 00:12:34,800 Speaker 1: that in a second. Actually what goes into the materials 244 00:12:34,840 --> 00:12:38,040 Speaker 1: of the recycling process and what you actually need there. 245 00:12:38,160 --> 00:12:41,160 Speaker 1: But how about the energy sources? Because of the energy 246 00:12:41,200 --> 00:12:44,520 Speaker 1: intensity you mentioned hydro being one of the main areas 247 00:12:44,679 --> 00:12:47,199 Speaker 1: when I think of certain parts of China's grid, I'm 248 00:12:47,200 --> 00:12:51,160 Speaker 1: thinking about the access to inexpensive and high intensity coal. 249 00:12:51,559 --> 00:12:54,800 Speaker 1: Is green aluminum something that can actually be powered by 250 00:12:54,800 --> 00:12:58,199 Speaker 1: renewable energy sources? Or is the energy intensity just too high? 251 00:12:58,559 --> 00:13:02,000 Speaker 2: So because the energy reques it's fifteen times less for 252 00:13:02,400 --> 00:13:05,720 Speaker 2: recycled you don't need, it's already heated up. But because 253 00:13:05,840 --> 00:13:09,560 Speaker 2: your energy demand is significantly lower that it would be 254 00:13:09,679 --> 00:13:12,640 Speaker 2: as compared to primary supply, you realize that the intensity 255 00:13:12,679 --> 00:13:15,200 Speaker 2: of energy you would actually need in order to produce 256 00:13:15,320 --> 00:13:18,400 Speaker 2: recycled aluminum is way way lower. So that opens up 257 00:13:18,559 --> 00:13:21,679 Speaker 2: other energy sources, which is like you rightly mertioned cleaner 258 00:13:21,840 --> 00:13:25,000 Speaker 2: and probably cleaner compared to say coal or other sources 259 00:13:25,040 --> 00:13:27,840 Speaker 2: for them to be competitive from a cost perspective, but 260 00:13:27,840 --> 00:13:31,160 Speaker 2: then most importantly from a reliability perspective in producing the 261 00:13:31,240 --> 00:13:34,040 Speaker 2: recycled aluminum that would ultimately become the green alumino. 262 00:13:34,120 --> 00:13:37,199 Speaker 1: Okay, so it's not just the fact that it's recycled 263 00:13:37,200 --> 00:13:42,080 Speaker 1: products that really changes the emissions of this, it's the 264 00:13:42,280 --> 00:13:44,760 Speaker 1: entire production process. So walk me a bit through that 265 00:13:44,880 --> 00:13:47,720 Speaker 1: and some of the things that make recycled aluminum unique 266 00:13:47,760 --> 00:13:50,839 Speaker 1: and really what the type of metal is that you need, 267 00:13:50,840 --> 00:13:54,320 Speaker 1: because it's not all just the cans that I am 268 00:13:54,360 --> 00:13:56,720 Speaker 1: throwing into my recycling bin at the end of the day. 269 00:13:56,840 --> 00:13:59,040 Speaker 2: And for those of us listening, please always remember to 270 00:13:59,080 --> 00:14:02,080 Speaker 2: recycle your cans. It plays a very important role in 271 00:14:02,120 --> 00:14:04,560 Speaker 2: the supply chain now and more so in the future. 272 00:14:04,600 --> 00:14:06,679 Speaker 2: But then to answer your question, there are two sources 273 00:14:06,679 --> 00:14:09,280 Speaker 2: of what we call fee stock or mosh scrap where 274 00:14:09,280 --> 00:14:12,439 Speaker 2: we get our recycled aluminum from. So number one is 275 00:14:12,480 --> 00:14:14,360 Speaker 2: what we call the old scrap. So, like I said, 276 00:14:14,480 --> 00:14:17,439 Speaker 2: if you've got can't in your kitchen that you probably 277 00:14:17,520 --> 00:14:20,400 Speaker 2: have finished using and looking to dispose, it's an important 278 00:14:20,440 --> 00:14:21,560 Speaker 2: fee stock for the market. 279 00:14:21,640 --> 00:14:23,680 Speaker 1: And are they taking scrap out of these cars as 280 00:14:23,680 --> 00:14:26,640 Speaker 1: well and out of batteries. It's coming from everywhere precisely, 281 00:14:26,680 --> 00:14:28,320 Speaker 1: So this is what you're seeing at a scrap yard 282 00:14:28,360 --> 00:14:29,320 Speaker 1: when you drive past it. 283 00:14:29,360 --> 00:14:31,720 Speaker 2: And so there's actually money to be made for those 284 00:14:31,760 --> 00:14:34,760 Speaker 2: who collect them, because what these smelters do is actually 285 00:14:34,800 --> 00:14:36,760 Speaker 2: they buy them. It's like going to a mine and 286 00:14:36,800 --> 00:14:39,280 Speaker 2: digging our box sites. This time you're donating the middle 287 00:14:39,280 --> 00:14:41,560 Speaker 2: of a city. So there's actually value in end of 288 00:14:41,640 --> 00:14:43,920 Speaker 2: life cast. That's why we call them salvage value. There's 289 00:14:44,000 --> 00:14:46,160 Speaker 2: value in there because of the metals that come with 290 00:14:46,240 --> 00:14:48,640 Speaker 2: ease dens and what we're seeing is that this old 291 00:14:48,920 --> 00:14:51,360 Speaker 2: scrap is going to play a key role in ensuring 292 00:14:51,400 --> 00:14:53,840 Speaker 2: that we meet our recycling demand. But there is also 293 00:14:54,080 --> 00:14:57,440 Speaker 2: another part of scrap, what we call newscrap, and then newscrap, 294 00:14:57,520 --> 00:15:00,200 Speaker 2: which is probably not common because it doesn't have to 295 00:15:00,240 --> 00:15:03,360 Speaker 2: do with consumers. It comes from manufacturers. So for every 296 00:15:03,400 --> 00:15:07,360 Speaker 2: manufacturing process there's something called scrappage. Human beings are not perfect, 297 00:15:07,400 --> 00:15:10,120 Speaker 2: so our machines. So whenever we have to produce a product, 298 00:15:10,240 --> 00:15:13,880 Speaker 2: a setain percentage of it would not ultimately end up 299 00:15:13,960 --> 00:15:17,160 Speaker 2: going into the final finished product, so we call them scrap. 300 00:15:17,200 --> 00:15:19,960 Speaker 2: We put that away. So in the production of aluminum products, 301 00:15:19,960 --> 00:15:23,120 Speaker 2: in the products there is also scrappage, so about ten 302 00:15:23,200 --> 00:15:25,960 Speaker 2: to fifteen to twenty percent, depending on the efficiency of 303 00:15:25,960 --> 00:15:28,600 Speaker 2: the factory or the manufacturer, would go into scrap. So 304 00:15:28,640 --> 00:15:31,880 Speaker 2: that scrap is also sold to a recycling company who 305 00:15:31,920 --> 00:15:34,400 Speaker 2: would then use that as a fee stock to ensure 306 00:15:34,480 --> 00:15:37,160 Speaker 2: that they're able to produce recycled aluminum. 307 00:15:37,240 --> 00:15:41,320 Speaker 1: Now new scrap, this is the leftovers can new scrap, 308 00:15:41,480 --> 00:15:43,560 Speaker 1: and I'm going to get really circular. Here, can it 309 00:15:43,600 --> 00:15:46,400 Speaker 1: be recycled aluminum but just the leftovers from a different 310 00:15:46,400 --> 00:15:47,320 Speaker 1: production process? 311 00:15:47,520 --> 00:15:51,080 Speaker 2: Yes, so all of them go into another smelting and 312 00:15:51,240 --> 00:15:53,800 Speaker 2: is melted again. But then the thing is that news 313 00:15:53,880 --> 00:15:57,240 Speaker 2: crap has a higher value because it's not contaminated. So 314 00:15:57,320 --> 00:15:59,520 Speaker 2: if you think about your cant, first of all, yes 315 00:15:59,520 --> 00:16:01,880 Speaker 2: it's an a on can, but then it's quoted with a 316 00:16:01,960 --> 00:16:04,840 Speaker 2: logo like for example, I said coca cola or pepsi 317 00:16:05,040 --> 00:16:07,640 Speaker 2: or whatever product it is, so that in itself is 318 00:16:07,680 --> 00:16:11,240 Speaker 2: a form of contamination that these recycling manufacturers would have 319 00:16:11,320 --> 00:16:14,120 Speaker 2: to get rid of. So the preference for most recyclers 320 00:16:14,160 --> 00:16:17,360 Speaker 2: is obviously to use if they could get access to newscrap, 321 00:16:17,400 --> 00:16:20,080 Speaker 2: that would be great. And then obviously, as manufacturers get 322 00:16:20,080 --> 00:16:23,200 Speaker 2: better at their job, the scrappageerate reduces, so you don't 323 00:16:23,240 --> 00:16:25,400 Speaker 2: find a lot of that newscrap in the market. And 324 00:16:25,440 --> 00:16:27,920 Speaker 2: if you permit me to throw some numbers, last year, 325 00:16:28,000 --> 00:16:30,920 Speaker 2: global production of news grap was about fifteen point five 326 00:16:30,920 --> 00:16:31,680 Speaker 2: million tonto. 327 00:16:31,960 --> 00:16:32,560 Speaker 1: Is that enough? 328 00:16:32,920 --> 00:16:35,080 Speaker 2: There is not enough newscrap, but of course that is 329 00:16:35,120 --> 00:16:37,640 Speaker 2: going to grow. By twenty thirty five, we expect our 330 00:16:37,760 --> 00:16:40,400 Speaker 2: market to reach twenty two point seven million, So that's 331 00:16:40,480 --> 00:16:43,760 Speaker 2: just shy of eight million increment over the next thirteen years, 332 00:16:43,800 --> 00:16:47,480 Speaker 2: whereas oldchscrap, which most of our listeners will be familiar with, 333 00:16:47,720 --> 00:16:50,760 Speaker 2: is currently sitting at around twenty three million in twenty 334 00:16:50,800 --> 00:16:53,480 Speaker 2: twenty two, but that would rise up to forty eight million, 335 00:16:53,560 --> 00:16:56,120 Speaker 2: And like I said, every recycler's dream would be to 336 00:16:56,160 --> 00:16:58,960 Speaker 2: get access to the new kind of scrap. But then, hey, 337 00:16:59,040 --> 00:17:01,560 Speaker 2: oach crap is not bad as well, given that it 338 00:17:01,800 --> 00:17:05,320 Speaker 2: helps lower the emission intensity of the production of alumino. 339 00:17:06,680 --> 00:17:09,560 Speaker 1: So we don't have enough scrap, either old or new, 340 00:17:09,640 --> 00:17:12,640 Speaker 1: to meet future demand for what we are thinking about 341 00:17:12,680 --> 00:17:15,159 Speaker 1: the aluminum market could potentially look like in the not 342 00:17:15,280 --> 00:17:18,080 Speaker 1: so distant future. And I guess the question is really 343 00:17:18,280 --> 00:17:20,280 Speaker 1: how do we fix that the couple of ways. 344 00:17:20,520 --> 00:17:23,159 Speaker 2: Number one, we have to increase primary supply, but then 345 00:17:23,359 --> 00:17:27,439 Speaker 2: primary supply in areas where obviously you get access to 346 00:17:27,680 --> 00:17:31,080 Speaker 2: clean energy sources. Number two, we would have to increase 347 00:17:31,200 --> 00:17:35,040 Speaker 2: the recycling, because not all the aluminum that exists in 348 00:17:35,080 --> 00:17:38,520 Speaker 2: stock today is actually recycled when they reached their end 349 00:17:38,520 --> 00:17:40,680 Speaker 2: of life. And that is why I encourage her consumers 350 00:17:40,680 --> 00:17:44,440 Speaker 2: as an example that if you are disposing of anything aluminum, 351 00:17:44,440 --> 00:17:46,879 Speaker 2: it's important you take it to recycling in order to 352 00:17:46,960 --> 00:17:49,399 Speaker 2: increase the fee stock that will be available for recyclists. 353 00:17:49,400 --> 00:17:52,920 Speaker 2: And once we do that, we increase their recycling production 354 00:17:53,000 --> 00:17:55,440 Speaker 2: as well. The thirteen, which is an interesting one, is 355 00:17:55,480 --> 00:17:58,720 Speaker 2: what I call the power of technology. If we develop 356 00:17:58,840 --> 00:18:01,679 Speaker 2: alternatives to our e liminum where there is light weighting, 357 00:18:01,760 --> 00:18:05,359 Speaker 2: or vehicles where there is cant As we develop alternatives, 358 00:18:05,520 --> 00:18:08,040 Speaker 2: we think that for example, in a base case, if 359 00:18:08,080 --> 00:18:12,240 Speaker 2: nothing changes last year, we consume over eighteen million tons 360 00:18:12,280 --> 00:18:15,280 Speaker 2: of aluminum on a business as usual trajectory, that could 361 00:18:15,359 --> 00:18:18,240 Speaker 2: rise to about one hundred and forty two million data 362 00:18:18,400 --> 00:18:20,600 Speaker 2: by twenty forty. That that's a lot of growth. And 363 00:18:20,680 --> 00:18:23,560 Speaker 2: like I said, business as usual unless we are either 364 00:18:23,680 --> 00:18:27,200 Speaker 2: mining more, recycling more, which probably would not be as 365 00:18:27,240 --> 00:18:31,000 Speaker 2: easy as investing in technologies that would reduce our dependency, 366 00:18:31,040 --> 00:18:33,600 Speaker 2: so that one forty million by twenty fifty could end 367 00:18:33,720 --> 00:18:36,040 Speaker 2: up actually being one hundred million rather than one forty 368 00:18:36,040 --> 00:18:39,240 Speaker 2: million as a result in investments in technologies that reduces 369 00:18:39,280 --> 00:18:42,440 Speaker 2: our demand for aluminum and then shift that to something else. 370 00:18:42,520 --> 00:18:44,840 Speaker 2: And an example is obviously the grid. So if you 371 00:18:44,880 --> 00:18:47,760 Speaker 2: take the grid is mostly metals and by grid I'm 372 00:18:47,760 --> 00:18:51,040 Speaker 2: referring to those transmission lines you probably see app in 373 00:18:51,040 --> 00:18:53,359 Speaker 2: the sky that takes power from a source all the 374 00:18:53,400 --> 00:18:55,359 Speaker 2: way down to your homes. And what we've realized is 375 00:18:55,400 --> 00:18:58,480 Speaker 2: that the dominant metals are actually copper or aluminum. But 376 00:18:58,520 --> 00:19:01,879 Speaker 2: here's where it gets interested. When ropper prices rise very high, 377 00:19:02,040 --> 00:19:05,400 Speaker 2: companies tend to switch to aluminum, and eliminum prices rise, 378 00:19:05,560 --> 00:19:08,199 Speaker 2: they tend to switch to copper. But this substitution is 379 00:19:08,240 --> 00:19:10,960 Speaker 2: purely based on economics. What we should be looking at 380 00:19:11,000 --> 00:19:14,960 Speaker 2: in the next generation of consumption, whether it's great or 381 00:19:15,160 --> 00:19:18,480 Speaker 2: vehicles or builders, is how can we replace our use 382 00:19:18,520 --> 00:19:21,560 Speaker 2: of aluminum with other products in order to reduce the amount. 383 00:19:21,840 --> 00:19:24,560 Speaker 1: So not copper and not aluminum. But if I had 384 00:19:24,560 --> 00:19:28,400 Speaker 1: to pick between the two, which has the lower emissions intensity? 385 00:19:28,680 --> 00:19:31,159 Speaker 2: Copper has a lower emissions intensity, but it comes out 386 00:19:31,160 --> 00:19:34,840 Speaker 2: of a prices is about three four times more expensive 387 00:19:35,000 --> 00:19:37,160 Speaker 2: on a paton basis compared to aluminum. 388 00:19:37,600 --> 00:19:40,760 Speaker 1: So you've definitely established that there is a bright future 389 00:19:40,760 --> 00:19:43,280 Speaker 1: for aluminum demand and it doesn't seem to be evading 390 00:19:43,320 --> 00:19:45,480 Speaker 1: anytime soon. And I want to know, really, where is 391 00:19:45,520 --> 00:19:49,200 Speaker 1: it coming from. Is it entirely vehicles? Certainly not drinking 392 00:19:49,200 --> 00:19:51,119 Speaker 1: any more soda on my end, so it's not my fault, 393 00:19:51,200 --> 00:19:55,080 Speaker 1: But where is the additional demand coming from going forward 394 00:19:55,119 --> 00:19:56,800 Speaker 1: in the next several decades. 395 00:19:57,200 --> 00:20:00,680 Speaker 2: So a Keithan will be the infrastructure for rubble energy. 396 00:20:00,720 --> 00:20:05,160 Speaker 2: As energy producers decentralize and obviously invest in solar and wind, 397 00:20:05,280 --> 00:20:08,040 Speaker 2: we will need a lot of infrastructure to support the 398 00:20:08,080 --> 00:20:11,440 Speaker 2: solars and then the wind turbines and so majority a 399 00:20:11,520 --> 00:20:14,400 Speaker 2: big percentage of the growth we expect moving on over 400 00:20:14,440 --> 00:20:18,480 Speaker 2: the next twenty years will come from renewable energy infrastructure. 401 00:20:18,480 --> 00:20:21,439 Speaker 2: That is number one. Number two is obviously construction. So 402 00:20:21,480 --> 00:20:25,399 Speaker 2: what we've realized is that once again governments are enforcing 403 00:20:25,640 --> 00:20:30,159 Speaker 2: sustainable ways of putting up, whether there it's some skytscapers 404 00:20:30,280 --> 00:20:33,600 Speaker 2: or even just traditional buildings. What we've realized is that 405 00:20:33,720 --> 00:20:36,199 Speaker 2: in some countries or in some cities, there is a 406 00:20:36,280 --> 00:20:39,520 Speaker 2: soft enforcement and I don't mean hard enforced. By soft enforcement, 407 00:20:39,720 --> 00:20:43,320 Speaker 2: governments has hinted that construction companies would need to have 408 00:20:43,359 --> 00:20:45,679 Speaker 2: a second look at the emissions profile, and what is 409 00:20:45,680 --> 00:20:48,960 Speaker 2: happening is that we're seeing more and more companies shift 410 00:20:49,080 --> 00:20:53,119 Speaker 2: to our luminum in the air building infrastructure because potentially 411 00:20:53,160 --> 00:20:55,600 Speaker 2: if you use recycled aluminum you are able to reduce 412 00:20:55,600 --> 00:20:58,200 Speaker 2: their emissions footprints, so construction will be one of them 413 00:20:58,320 --> 00:21:01,080 Speaker 2: in which part of the world to states, and the 414 00:21:01,119 --> 00:21:05,159 Speaker 2: third one is the transport industry. Earlier I mentioned how 415 00:21:05,320 --> 00:21:08,240 Speaker 2: battery electric vehicles have two options when they want to 416 00:21:08,240 --> 00:21:11,200 Speaker 2: increase the performance of the vehicle. You either keep investing 417 00:21:11,359 --> 00:21:14,320 Speaker 2: in better batteries that would give for example, American and 418 00:21:14,440 --> 00:21:16,720 Speaker 2: use as the range they need, or you can reduce 419 00:21:16,760 --> 00:21:19,560 Speaker 2: the weight and the weight of a car an electric vehicle, 420 00:21:19,640 --> 00:21:22,680 Speaker 2: you're looking at a one torn beast in terms of size, 421 00:21:22,760 --> 00:21:25,800 Speaker 2: so if you can reduce that one torn vehicle, you 422 00:21:26,040 --> 00:21:29,600 Speaker 2: ultimately improve the performance without even touching the battery. So 423 00:21:29,760 --> 00:21:34,359 Speaker 2: three areas infrastructure to support new energy, build, construction industry, 424 00:21:34,520 --> 00:21:37,439 Speaker 2: and then the battery electric vehicle industry would be the 425 00:21:37,480 --> 00:21:40,800 Speaker 2: biggest groups demand sectors for aluminum in future. 426 00:21:41,200 --> 00:21:43,479 Speaker 1: Now it seems to me that there is certainly more 427 00:21:43,520 --> 00:21:46,000 Speaker 1: demand for green and recycled aluminum, but we're going to 428 00:21:46,000 --> 00:21:49,560 Speaker 1: see a good amount of brand new aluminum with need 429 00:21:49,640 --> 00:21:52,119 Speaker 1: for box site to be mined. And I want to 430 00:21:52,119 --> 00:21:54,440 Speaker 1: better understand even though there's enough of it out there 431 00:21:54,480 --> 00:21:57,800 Speaker 1: at least to meet our forecasted future demand, where is 432 00:21:57,840 --> 00:22:00,879 Speaker 1: it located and really is available, ability of it in 433 00:22:00,920 --> 00:22:04,480 Speaker 1: some way open to geopolitical risk because invariably, if it's 434 00:22:04,520 --> 00:22:06,920 Speaker 1: in just a couple of locations in the world, those 435 00:22:06,960 --> 00:22:09,840 Speaker 1: countries have the ability to really control the global supply. 436 00:22:10,160 --> 00:22:13,159 Speaker 2: Indeed, and JOSI throw numbers, which I try not to 437 00:22:13,200 --> 00:22:16,199 Speaker 2: do often, three countries produce seventy two percent of the 438 00:22:16,200 --> 00:22:19,280 Speaker 2: books that we need to produce alumina one, two, three, 439 00:22:19,520 --> 00:22:22,800 Speaker 2: just three, So three quarters of aluminamus coming from Australia, 440 00:22:23,000 --> 00:22:26,560 Speaker 2: China and Guinea. And you rightly mention that when you 441 00:22:26,640 --> 00:22:29,320 Speaker 2: have such few countries controlling a big chunk of the 442 00:22:29,359 --> 00:22:33,440 Speaker 2: supply chain, it's exposed to disruption. Last year, aluminum prices 443 00:22:33,680 --> 00:22:37,959 Speaker 2: rose to record highs simply because a few months ago 444 00:22:38,000 --> 00:22:40,280 Speaker 2: there was a quiditar in Guinea, which is a major 445 00:22:40,320 --> 00:22:44,679 Speaker 2: producer of the commodity. Then instantly aluminum producers started getting 446 00:22:44,720 --> 00:22:47,720 Speaker 2: consent around will I be able to get access to 447 00:22:47,760 --> 00:22:51,200 Speaker 2: the raw materials I need? And that drove prices very high. Now, 448 00:22:51,280 --> 00:22:54,160 Speaker 2: if you look at the aluminum supply chain itself, take 449 00:22:54,160 --> 00:22:57,879 Speaker 2: an example, Russia controls quite as significant part of the 450 00:22:57,920 --> 00:23:01,760 Speaker 2: production through Roussal, and obviously when the war happened, or 451 00:23:01,800 --> 00:23:05,120 Speaker 2: began last year and sanctions were imposed on a lot 452 00:23:05,160 --> 00:23:09,000 Speaker 2: of companies, and companies self sanction themselves with Russia. What 453 00:23:09,160 --> 00:23:12,480 Speaker 2: happened was that overnight aluminum prices spiked up as well, 454 00:23:12,560 --> 00:23:15,600 Speaker 2: even though there were no direct sanction on Russia aluminum. 455 00:23:15,680 --> 00:23:20,320 Speaker 2: But that is why it's important obviously for governments companies 456 00:23:20,359 --> 00:23:23,720 Speaker 2: to help diversify the supply chain in order not to 457 00:23:23,800 --> 00:23:26,560 Speaker 2: depend on a few countries. But it gets interesting when 458 00:23:26,560 --> 00:23:29,200 Speaker 2: you go up stream, because stop doing that. These metals 459 00:23:29,200 --> 00:23:32,879 Speaker 2: are given by nature. No matter how good America gets, 460 00:23:32,960 --> 00:23:34,880 Speaker 2: if you don't have it in the ground, you don't 461 00:23:34,920 --> 00:23:36,720 Speaker 2: have it. There's nothing you can do about it. But 462 00:23:36,760 --> 00:23:41,240 Speaker 2: then there's another option, urban mining. If countries like America, Canada, 463 00:23:41,400 --> 00:23:45,520 Speaker 2: the UK, Europe as a whole would invest in making 464 00:23:45,800 --> 00:23:48,439 Speaker 2: recycling a big part of the supply chain, then we 465 00:23:48,480 --> 00:23:52,120 Speaker 2: would need to depend on three countries for the few 466 00:23:52,119 --> 00:23:54,080 Speaker 2: stock we need to produce aluminum. 467 00:23:54,280 --> 00:23:57,000 Speaker 1: So not only is there geopolitical risk, but invariably there 468 00:23:57,040 --> 00:24:02,119 Speaker 1: are current policies in place both supporting recycling and decarbonization, 469 00:24:02,280 --> 00:24:06,320 Speaker 1: but also changing the way supply chains and trade works. 470 00:24:06,400 --> 00:24:09,320 Speaker 1: And one of the things I'm wondering is in the EU, 471 00:24:09,440 --> 00:24:13,080 Speaker 1: the carbon border adjustment mechanism. What impact is this having 472 00:24:13,280 --> 00:24:14,960 Speaker 1: on aluminum producers? 473 00:24:15,400 --> 00:24:17,439 Speaker 2: So, the way I like you think about it is 474 00:24:17,680 --> 00:24:21,480 Speaker 2: Europe's role from a demand supply perspective, compared to countries 475 00:24:21,520 --> 00:24:25,520 Speaker 2: like China or the United States, Europe is relatively small. However, 476 00:24:25,720 --> 00:24:28,399 Speaker 2: I tend to believe that when Europe coughs, the world 477 00:24:28,440 --> 00:24:30,960 Speaker 2: catches a cold. And I use metals as an example 478 00:24:30,960 --> 00:24:34,000 Speaker 2: whenever I talk about this, because sea bomb in itself 479 00:24:34,240 --> 00:24:36,960 Speaker 2: or the carbon boarder adjustment mechanism might have an impact 480 00:24:37,080 --> 00:24:40,320 Speaker 2: on a very small percentage of global production. Once the 481 00:24:40,320 --> 00:24:43,679 Speaker 2: EU enforces these kind of policies, it becomes a global 482 00:24:43,720 --> 00:24:46,119 Speaker 2: standard and how the country adopt it. So let's unpack 483 00:24:46,160 --> 00:24:48,719 Speaker 2: what sea bumbers. So what the European Union is currently 484 00:24:48,760 --> 00:24:52,080 Speaker 2: saying is that, look, we've set very high targets for 485 00:24:52,200 --> 00:24:56,000 Speaker 2: our local producers, that your emission's profile need to stay 486 00:24:56,040 --> 00:24:58,520 Speaker 2: within a certain range. Either than that will put a 487 00:24:58,560 --> 00:25:01,400 Speaker 2: penalty on every turn of aluminum you produce. And that's 488 00:25:01,440 --> 00:25:03,359 Speaker 2: good news. But then you think about the fact that 489 00:25:03,440 --> 00:25:06,920 Speaker 2: at the same time, Europe's border is open to important 490 00:25:06,960 --> 00:25:10,040 Speaker 2: aluminum products from countries like China or the United States 491 00:25:10,160 --> 00:25:13,639 Speaker 2: or wherever it becomes unfair for domestic producers. So what 492 00:25:13,720 --> 00:25:16,600 Speaker 2: the European Union then decided is that to ensure that 493 00:25:16,680 --> 00:25:20,199 Speaker 2: we level the playing field, if you are important aluminum 494 00:25:20,240 --> 00:25:23,480 Speaker 2: from any third country, we need to know their mission's 495 00:25:23,520 --> 00:25:26,159 Speaker 2: profile of that product as well, And if it doesn't 496 00:25:26,200 --> 00:25:29,440 Speaker 2: meet the domestic standard we've set and it crosses that threshold, 497 00:25:29,560 --> 00:25:32,359 Speaker 2: you would have to pay a carbon tax, so to speak. 498 00:25:32,480 --> 00:25:35,040 Speaker 2: So in theory, like I said, it would just touch 499 00:25:35,320 --> 00:25:38,639 Speaker 2: just a small percentage of supply, given Europe is not 500 00:25:38,680 --> 00:25:41,760 Speaker 2: the biggest demand center. But what I've seen in previous 501 00:25:41,880 --> 00:25:44,879 Speaker 2: policies related to metals that came out of Europe is 502 00:25:44,920 --> 00:25:48,240 Speaker 2: that it begins to set the global benchmark that other 503 00:25:48,320 --> 00:25:51,119 Speaker 2: countries will follow. We're time, I would not be surprised 504 00:25:51,119 --> 00:25:53,920 Speaker 2: that China will come up with its own version of SEABAM, 505 00:25:54,000 --> 00:25:56,520 Speaker 2: where time I would not be surprised that America will 506 00:25:56,560 --> 00:25:59,160 Speaker 2: come up with its own version of SEABAM, which I doubt, 507 00:25:59,400 --> 00:26:01,720 Speaker 2: or with time, we would probably see a similar thing 508 00:26:01,880 --> 00:26:04,280 Speaker 2: happening in Australia, And for me, that would be the 509 00:26:04,400 --> 00:26:08,359 Speaker 2: legacy of SEABAMB, not necessarily the amount of production that 510 00:26:08,359 --> 00:26:10,240 Speaker 2: it would currently impact. 511 00:26:10,600 --> 00:26:12,520 Speaker 1: Do you doubt or do you think that it would 512 00:26:12,560 --> 00:26:15,720 Speaker 1: happen in the United States see a version of seabam. 513 00:26:15,960 --> 00:26:18,119 Speaker 1: Because I heard you say both. You said with time, 514 00:26:18,280 --> 00:26:19,800 Speaker 1: it could happen in America, which I. 515 00:26:19,760 --> 00:26:24,880 Speaker 2: Doubt understand sir. America's metals policy has always centered around 516 00:26:24,960 --> 00:26:29,760 Speaker 2: national security. Unlike Europe, where it's mostly sustainability driven and 517 00:26:29,800 --> 00:26:32,760 Speaker 2: everything else. In America, until it has to do with 518 00:26:32,840 --> 00:26:36,280 Speaker 2: national security, there are very little regulations around it. Maybe 519 00:26:36,320 --> 00:26:38,600 Speaker 2: in some states like California, but then obviously there's no 520 00:26:38,680 --> 00:26:41,720 Speaker 2: aluminum going on in California. At the federal level, I 521 00:26:41,880 --> 00:26:45,480 Speaker 2: doubt that America would have the free reign to actually 522 00:26:45,640 --> 00:26:49,520 Speaker 2: enforce even emission cups to the largest then or extend 523 00:26:49,560 --> 00:26:53,000 Speaker 2: it to a body adjustment mechanism. So if possible, never 524 00:26:53,040 --> 00:26:56,120 Speaker 2: say never. If you look at the Inflation Reduction Act, 525 00:26:56,480 --> 00:26:59,080 Speaker 2: I never thought that America would actually come to the 526 00:26:59,119 --> 00:27:01,480 Speaker 2: table with such a big bang, but here's what they did. 527 00:27:01,640 --> 00:27:04,720 Speaker 2: So never say never that it will be a very fastretch. 528 00:27:04,960 --> 00:27:09,000 Speaker 1: Okay, so we've reached watter ignore. Now you as the 529 00:27:09,560 --> 00:27:12,560 Speaker 1: lead metals analyst and leading our metals team, I've got 530 00:27:12,560 --> 00:27:14,000 Speaker 1: a couple of things for you, and I'm just going 531 00:27:14,040 --> 00:27:16,720 Speaker 1: to throw out a word or a phrase and I 532 00:27:16,800 --> 00:27:18,800 Speaker 1: want to know if this is something that you are 533 00:27:18,840 --> 00:27:22,359 Speaker 1: watching closely at the moment, or if perhaps you're ignoring 534 00:27:22,400 --> 00:27:25,960 Speaker 1: it at present, waiting for it to emerge as something 535 00:27:26,000 --> 00:27:28,199 Speaker 1: more significant in the future. So you're not saying that 536 00:27:28,240 --> 00:27:31,200 Speaker 1: it'll never be important, but right now not something you're 537 00:27:31,240 --> 00:27:37,679 Speaker 1: watching closely. So watter ignore boxed drinks replacing canned aluminum drinks. 538 00:27:38,080 --> 00:27:42,000 Speaker 2: Never, that's not preference d. 539 00:27:44,000 --> 00:27:46,200 Speaker 1: It's that cold can that you've taken out of the fridge. 540 00:27:46,240 --> 00:27:47,040 Speaker 1: It's just so great. 541 00:27:47,320 --> 00:27:50,440 Speaker 2: Okay, I cannot imagine drinking my BF from a boss. 542 00:27:50,359 --> 00:27:53,520 Speaker 1: But perhaps more relevant to the metals industry in water, 543 00:27:53,640 --> 00:27:59,119 Speaker 1: ignore drones for monitoring minds. And then how about blockchain 544 00:27:59,240 --> 00:28:01,600 Speaker 1: specifically for aluminum. 545 00:28:01,119 --> 00:28:04,480 Speaker 2: Watch Obviously we've talked about the carbon body adjustment mechanism. 546 00:28:04,560 --> 00:28:08,439 Speaker 2: Part of the challenges is really effectively tracking the supply 547 00:28:08,560 --> 00:28:12,359 Speaker 2: chain emissions associated with every piece of aluminum that is 548 00:28:12,400 --> 00:28:15,600 Speaker 2: important in the EU. And am I not necessarily be blockchain, 549 00:28:15,640 --> 00:28:18,840 Speaker 2: but I do believe that technology including blockchain will play 550 00:28:18,840 --> 00:28:22,520 Speaker 2: a key role to enabling regulators to monitor that. So 551 00:28:22,840 --> 00:28:25,280 Speaker 2: something that we keep in eyes on. We've written about 552 00:28:25,280 --> 00:28:27,840 Speaker 2: it a few years ago in terms of how blockchain 553 00:28:28,119 --> 00:28:30,760 Speaker 2: or technology from a wider perspective will play a key 554 00:28:30,840 --> 00:28:32,600 Speaker 2: role in supply chain tracking. 555 00:28:33,000 --> 00:28:35,600 Speaker 1: Okay, thank you very much for joining us today. Quasy 556 00:28:35,640 --> 00:28:37,879 Speaker 1: to talk about this hard to abate space that is 557 00:28:37,920 --> 00:28:39,680 Speaker 1: aluminum that we're all watching closely. 558 00:28:40,040 --> 00:28:42,240 Speaker 2: It's always anana to join you, Dana, Thank you. 559 00:28:51,840 --> 00:28:54,880 Speaker 1: Bloomberg ne EF is a service provided by Bloomberg Finance 560 00:28:54,960 --> 00:28:58,440 Speaker 1: LP and its affiliates. 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