Coal vs renewables: The electricity cost battle influencing aluminium production pattern
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For more than a century, aluminium producers have lived by a simple rule of securing the cheapest electricity possible, and everything else becomes manageable.
The logic was straightforward. Aluminium smelting is one of the most electricity-intensive industrial processes on earth. Every tonne of primary aluminium requires enormous volumes of power to separate aluminium from alumina through the Hall-Héroult process, a technology that has remained fundamentally unchanged since the late nineteenth century. The industry's fortunes have therefore been determined less by geology and more by what happens on power grids.
For decades, coal represented the backbone of global aluminium production. It was abundant, dispatchable and, in many regions, cheap enough to support large-scale smelting operations. Today, however, a growing number of producers are finding themselves in an unusual position where renewable energy is no longer merely an environmental aspiration. In several markets, it is becoming a credible competitor to coal on cost.
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