AL Circle: What are some recent initiatives and projects ABAL has been working on to promote the sustainable growth of the aluminium industry in Brazil and the Americas?

Janaina: ABAL has been engaged in a series of discussions aiming to improve regulatory frameworks to enable the creation of a business environment that recognises the strategic importance of the aluminium industry, its competitive advantages, and the strengthening of our competitiveness.

Among those initiatives, ABAL have provided contributions to discussions related to the overcoming of barriers to the Brazilian business environment within the scope of the Brazil Cost Reduction Project, led by the Brazilian government.

ABAL also participates in the collaborative network Made in Brasil Ilimitado (MiBI), an initiative coordinated by the Ministry of Industry aiming to increase the productivity and competitiveness of the Brazilian automobile sector, considering the reduction of vehicle emissions. ABAL prepared a study about the impact of the carbon market on the Brazilian aluminium industry. The material serves as input for discussions on the regulation of this market and in the Government's dealings with instruments adopted by other countries, such as the European Union Border Adjustment Mechanism (CBAM).

ABAL also contributes to the recently created Industrial Development Council, with the purpose of establishing guidelines and missions for the design of a new Brazilian industrial policy. Among them, emphasis is placed on the objective of expanding the productive capacity of the Brazilian industry through the production and adoption of inputs, including critical materials and minerals, low-carbon technologies, and processes, with energy efficiency.

The Association commissioned a study that indicates that the aluminium sector in Brazil already operates with a carbon intensity significantly lower than the world average (3.3 times lower). It is estimated that cradle-to-gate emissions – which consider the extraction of bauxite to the manufacture of primary aluminium – are between 2.75 and 3.5 tCO2e/tonne, while the world average varies from 9 .7 to 11.7 tCO2e/tonne.

In addition to the intrinsic attributes of the metal, the use of the best environmental, social and governance management practices by companies operating in the sector means that Brazilian aluminium is considered a strategic ally in meeting the decarbonisation goals of its main consumer markets.

ABAL is affiliated with the Aluminium Stewardship Initiative (ASI) and encourages our associates to obtain this international certification of environmental, social and corporate governance management standards.

AL Circle: How have trade dynamics and market trends impacted the aluminium industry in the Americas? What strategies does ABAL suggest to its members and associates to adapt to these changes and foster industry growth?

Janaina: The escalation of tensions in the international geopolitical scenario has raised concerns over the risks of disruption in the supply chains and has led governments to adopt a series of policies aimed at ensuring access to critical materials, reducing its dependence on imports or at taking advantage of the comparative advantages of each country.

As a result, some jurisdictions have resorted to the application of a series of instruments ranging from the strengthening of trade defence mechanisms, the imposition of sophisticated trade barriers associated with national sovereignty or order adjustment mechanisms linked to environmental issues, or providing funds to finance activities aimed at increasing production capacity and R, D & I.

In addition to supporting our associates in understanding the impacts and opportunities arising from this new global dynamic, ABAL also seek to collaborate with the Brazilian Government in the pursuit of paths towards a new industrialisation model that can leverage our competitive advantages and reposition the country in the global chain.

AL Cirle: What are the main challenges and opportunities for the aluminium industry in the Americas or South America in the coming years, and how is ABAL preparing to address them?

Janaina: The main challenge is to increase the aluminium consumption in local market. The contrasting analysis of per capita consumption of aluminium products in Brazil, which is around 7.5 kg per inhabitant, with the global average of 22.4 kg/per inhabitant, highlights the universe of opportunities still to be explored considering the potential to increase the sector’s participation in the national market alone. Opportunities lie in expanding the use of aluminium in different segments, such as the automotive and electrical sectors.

ABAL also advocates for the strengthening of trade defence measures as legitimate instruments for correcting trade distortions caused by anti-competitive practices, in addition to promoting tax reform that guarantees equality between national and imported products, which is essential for competitiveness.

AL Circle: How did Brazil become the first country in the world to attain a 100% recycling rate for aluminium cans, and what measures were instrumental in achieving this milestone?

Janaina: Aluminium recycling rates in Brazil are among the highest in the world. In 2022, 59.3% of the total aluminium products consumed in Brazil came from recycling, corresponding to 905 thousand tons. In addition to the percentage of scrap recovery, Brazil is also a reference in recycling beverage cans, and this performance is mostly due to the pioneering spirit of the aluminium sector, which has been making significant investments in its own collection network and recycling capacity, even before the establishment of the national reverse logistics policy in 2010.

The sector has been strongly committed to building a ready capacity, both for recycling and for the production of aluminium sheets to meet the needs of the national market.

AL Circle: How do governmental policies and regulations impact the aluminium industry, and what changes or reforms might be needed to support its growth and sustainability?

Janaina: We need to advance in designing an industrial policy that recognises the added value of productive chains, guaranteeing isonomic treatment between domestic and imported products. In addition to the creation of measures to encourage technological innovation and the strengthening of a fair trade environment that ensures predictability, it is equally important to implement initiatives aimed at correcting market imbalances and curbing informality and anticompetitive practices.

This agenda requires the articulation of several actors – companies, governments, and society – that, moved by a sense of urgency, are capable of defining a strategic vision of a development model for the country in which the aluminium industry takes an indispensable and strategic part in the promotion of a more sustainable life and future.

AL Circle: In your opinion, what is the outlook for the aluminium industry in the Americas?

Janaina: Despite the volatility of the national and international market caused by the economic slowdown and the uncertainties with changes in the geopolitical scenario, the prospectives for the aluminium industry in the region are positive, and there are reasons to renew our belief in the revitalisation of the industry and the possibility of resuming consistent long-term growth.

Aluminium is a strategic metal for the development of innovative and sustainable solutions for important industrial segments. In line with global expectations, the Brazilian aluminium industry has been resiliently preparing to play a crucial role in establishing a new industrialisation model.

As we witness the retreat of global markets, the aluminium industry renews its stakes in Brazil. The projects´ pipeline foreseen until 2025 includes investments in the order of US$ 6 billion in several initiatives ranging from the expansion of mines and bauxite reserves, resumption of capacity, expansion and construction of new plants, new Technologies for environmental conservation, reduction of water consumption and greenhouse gas emissions, diversification of the energy matrix, in addition to the modernisation and installation of new collection and recycling centres.

In line with the trajectory of most emerging countries, Brazil has a large part of its national production aimed at meeting domestic demand, with international trade playing a secondary but no less important role.

The country has strategic assets to strengthen a basic industry capable of meeting domestic demand and repositioning Brazil in the global chain. The verticalisation of the productive chain

ensures performance and reduces the country's exposure to externalities experienced in critical moments, allowing the continuity of operations and manufacturing of higher value-added products, which generate wealth for the country.