Decarbonising metal, even only partly, can earn you a price premium
For the first time in its 143-year history, the London Metal Exchange (LME) will be using greenness and cleanness as a trading factor. Aluminium produced with clean electricity will receive a low-carbon halo, and aluminium produced with the usual fire and brimstone will occupy an inferior rung. Investors have for some time been very demanding about the social – the S – and the governance – the G – of ESG; now they’re being very demanding about the E – environment.
“We’ve now moved to the next great emerging challenge of ESG in metals, which is environmental,” said LME CE Matt Chamberlain. Aluminium is made by crushing and refining bauxite into a white alumina powder and then smelting the white alumina powder into aluminium metal. What’s so different about that process and the processes of every other metal?
Yes, aluminium does use a heck of a lot of electricity, and, no, the LME is not working alphabetically down to zirconium. Nevertheless, producers of all ores and metals would do well to use the sun, wind, fast-flowing water and other sources of zero-emission energy, even if only partly. The LME is not saying no carbon but it is saying low carbon. Those who continue to display a burn-and-emit stubbornness are playing with funding fire.
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