Part 2: Does every stakeholder in Europe’s aluminium scrap debate fully understand the recycling business model?

In Part 1 of this interview, Stefanie Dixon challenged some of the biggest assumptions shaping Europe's aluminium scrap debate, arguing that recycling policy cannot be built on tonnage figures alone.

Stefanie is a strong advocate for evidence-based policymaking and believes that effective regulation must be built on a clear understanding of how the recycling industry actually works. Having worked directly with recyclers, processors, traders and foundries across international markets, she brings a unique value-chain perspective that bridges the gap between policy, manufacturing and the commercial realities of recycling.

In this second instalment, the discussion moves beyond the fundamentals to examine the policy, investment and market reforms needed to strengthen Europe's recycling ecosystem. From processing capacity and trade competitiveness to the role of commercial incentives in retaining valuable scrap, Dixon explains why the future of Europe's circular aluminium economy will depend less on restricting exports and more on creating conditions that make domestic recycling the most commercially attractive option.

AL Circle: One argument for retaining scrap is that greater domestic availability could encourage investment in European sorting and upgrading capacity. However, could export restrictions and the resulting pressure on scrap values weaken the business case for processing lower-grade materials such as twitch or TT? What market conditions are needed to make investment in advanced sorting, upgrading and alloy-separation technologies commercially viable?

Stefanie Dixon: Again, let's be honest about what is actually being proposed.

We are not discussing paying global market prices while restricting exports. We are discussing restricting exports precisely because it is expected to reduce domestic scrap prices in an effort to make foundries more competitive, while giving very little consideration to the commercial realities of recycling businesses.

That distinction is important. It is, by definition, an intervention intended to influence market prices. In other words, it is a form of market distortion. And yes, in my view, it is highly likely to weaken the business case for investment.

 

From where I sit, the expectation increasingly seems to be that recyclers should accept lower prices, invest millions in advanced sorting and upgrading technology, produce cleaner and more tightly specified material, offer favourable payment terms and continue supplying European consumers on increasingly demanding commercial terms, all while accepting a reduced return for doing so.

Is it reasonable to expect one part of the value chain to absorb the cost of making another part more competitive?

The same logic could be applied elsewhere in the supply chain. European transport costs can, in some cases, exceed the cost of shipping a container to Asia. Yet nobody is suggesting restricting domestic freight rates to improve the competitiveness of domestic manufacturers. That illustrates that competitiveness is influenced by many cost factors, not simply the price paid for scrap. A competitive circular economy cannot be built on the assumption that recyclers alone will absorb the cost of making everyone else more competitive.

Who is going to invest if the economics no longer work? Investment follows economics. Companies invest millions of euros in advanced sorting, X-ray transmission (XRT), LIBS, sensor-based sorting and alloy separation because they believe there will be a return on that investment over many years.

If Europe genuinely wants greater domestic utilisation of complex grades such as Twitch and Taint Tabor, then the priority should be creating the commercial certainty, investment confidence and market conditions that make those investments worthwhile not weakening the very economics needed to deliver them.

Environmental legislation is already encouraging investment in upgrading scrap to produce cleaner, higher-quality secondary raw materials. However, those investments require time, confidence and stable commercial conditions. Restricting exports while simultaneously reducing the value of the feedstock risks sending the opposite investment signal.

AL Circle: Europe’s circular economy ambitions increasingly emphasise keeping valuable secondary raw materials within the region. How should policymakers distinguish between genuine “scrap leakage” and efficient international trade that directs specific scrap grades towards facilities capable of recovering their maximum economic and material value?

Stefanie Dixon: We need stop assuming that every exported tonne represents a failure of the circular economy because Europe is part of a global circular economy, not an isolated one.

Calling every export "scrap leakage" immediately frames international trade as a problem.

In reality, the picture is much more nuanced. Some exports may reflect gaps in domestic capability or economics, while many others simply reflect efficient global commodity markets.

Exported scrap is not disappearing or being wasted, it is being sold. That trade supports billions of euros of economic activity through recycling, processing, transport, logistics, ports, financing and exports before the material even leaves Europe.

The question is therefore not whether value is leaving Europe, but which parts of the value chain Europe wants to retain and whether the commercial conditions exist to do so competitively.

If aluminium scrap should never leave Europe, should Europe also stop importing primary aluminium, alloys and manufactured products from outside Europe? Or do we accept that international trade allows different regions to specialise in different parts of the value chain?

I also think it's important that we don't lose sight of the bigger environmental picture. Carbon emissions don't recognise borders, and neither should good environmental policy. We all share the same atmosphere, and aluminium is traded within a global economy.

Read all the latest developments in Europe’s aluminium recycling industry

The objective should be to achieve the greatest environmental and material benefit from every tonne of scrap, wherever that can be done most effectively. Geography alone shouldn't become the measure of sustainability.

If restricting exports simply shifts production towards greater primary aluminium consumption elsewhere, we need to ask whether we've reduced global emissions or simply shifted them while improving Europe's own carbon accounting.

The objective shouldn't be to maximise domestic recycling at any cost. It should be to maximise the environmental and economic value recovered from every tonne of aluminium.

Sometimes that will happen within Europe, and sometimes the best recovery route will legitimately be elsewhere.

AL Circle: Would a grade-specific or quality-based policy framework be more effective than blanket restrictions on aluminium scrap exports? If so, how could such a system work without creating excessive complexity or disrupting established recycling supply chains?

Stefanie Dixon: Before restricting trade, we should first understand what is actually being traded.

I think we first need much better data. One of the biggest limitations today is that export statistics are largely based on a handful of HS commodity codes, which group together an enormous range of aluminium scrap qualities, alloys and specifications.

I also think this is part of the problem with the current narrative. Some stakeholders understandably present the data from the perspective of their own part of the value chain. The difficulty is that, when those figures are viewed in isolation, they can give the impression that all exported aluminium scrap is equally suitable for European consumers. My experience as a trader suggests that is simply not the case.

A shipment of clean 6063 extrusion, mixed Twitch, Taint Tabor, painted extrusion, mixed cast, or aerospace alloy scrap may all be reported under the same broad customs classification. That makes it very difficult to have an informed discussion about which materials are actually leaving Europe.

I'd much rather see the industry improve reporting first. For example, recording recognised ISRI specifications alongside customs declarations or Bills of Lading would give policymakers a far clearer understanding of what is actually being exported.

Only then can policy be based on evidence rather than assumptions.

In theory, a grade-specific framework may sound attractive to some. In practice, I think it would be extremely difficult to implement consistently. One issue I think has been largely overlooked is how such a system would function during periods of weaker domestic demand. Markets don't operate at full capacity all year round.

I’ll give you a real example. I remember a few years ago standing in front of a bay containing several hundred tonnes of clean extrusion. We had an existing contract in place, the price had already been fixed, and overnight the buyer, a major European foundry, cancelled its delivery slots. From memory, no new slots were released for more than four weeks.

At the same time, another recycler I was speaking to, who specialised in supplying segregated single-alloy scrap into European foundries, was sitting on several thousand tonnes of stock for months. Evidently, not because scrap availability was limiting production, but because demand for the foundries' own finished products had weakened and order books had softened.

As a recycler, what are you expected to do in that situation? Continue financing ever growing stock? Tell your suppliers you can no longer buy material? Effectively turn business away because your customer has stopped taking deliveries?

Don't forget that, in this example, the selling price had already been fixed. While that material sat in the yard, the market continued to move. You then have to make difficult commercial decisions. Do you sell replacement material elsewhere simply to create physical space and keep the business operating, hoping you'll eventually be able to buy back against your fixed position? These are genuine commercial risks that recyclers manage every day.

Now imagine export restrictions had been in place, whether on all aluminium scrap or even just extrusion. What would the expectation have been?  Would recyclers have needed to apply for an exemption? If so, how quickly would that process operate? Would businesses have to disclose commercially sensitive information simply to justify accessing an alternative market?

Who decides whether no suitable domestic outlet exists? How quickly could that decision realistically be made? Commodity markets move in hours and days, not weeks or months

Or, more realistically, would we simply have been left holding the material until the foundry decided it wanted it again, while losing significant revenue because cancelled delivery slots prevented us from trading and alternative markets were no longer available?

This scenario also raises another important question. If export restrictions are introduced to guarantee domestic supply, what obligations, if any, fall on domestic consumers? Would foundries be required to maintain agreed delivery slots regardless of market conditions?

Would they be expected to offer commercially competitive payment terms and contractual certainty so that all participants have fair access to the domestic market? Or does the commercial and financing risk simply transfer almost entirely to the recycling sector?

There sometimes seems to be an assumption that recyclers should simply hold material until domestic consumers are ready to buy it. But recyclers are not storage facilities or subsidiaries of European foundries. They are independent commercial businesses that collect, process, finance, upgrade and market secondary raw materials, while carrying significant inventory, price and operational risk.

AL Circle: Europe wants to increase recycled content in aluminium products while reducing dependence on carbon-intensive primary metal. Which scrap streams offer the most realistic near-term opportunity for greater domestic utilisation, and which will continue to require international markets?

Stefanie Dixon: I actually think the market is already moving in the direction policymakers want. Manufacturers are increasingly demanding recycled content and are entering into more closed-loop agreements and recyclers are investing in better sorting technology. Those trends are already encouraging more domestic recovery without trade restrictions.

Interestingly, I think the greatest opportunity and the greatest challenge are actually the same material stream(s), Taint Tabor and similar mixed grades. These often contain a significant proportion of valuable alloys in contaminated formats, including extrusion, cast aluminium, mixed sheets of 1xxx, 3xxx, 5xxx and other 6xxx alloys and unfortunately, small quantities of 2xxx and 7xxx alloys that inevitably find their way into the shredder stream despite best efforts at segregation. 

From a resource perspective, there is enormous value within these grades, but unlocking that value requires investment in upgrading and alloy separation. I believe this is where Europe has the greatest opportunity to increase domestic recycled content. But it is also the material most likely to continue requiring international markets in the short to medium term because of the sheer volume produced and the current limitations in domestic processing capacity, sorting capability and commercial demand.

As technology advances, I would expect more of these mixed streams to remain within Europe. AI, LIBS and other sensor-based sorting technologies will continue to improve alloy recovery. But that transition won't happen overnight and it won't happen on the back of export restrictions.

It will happen when the economics support the investment needed to recover those alloys competitively. I don't think the question is whether mixed or contaminated grades should stay or leave. The question is how quickly Europe can develop the capability to recover more of that value domestically, without undermining the economics needed to build that capability in the first place.

AL Circle: Finally, which do you think is Europe’s current challenge — a shortage of aluminium scrap, or a mismatch between the scrap grades available and the specifications, technologies and demand profile of European consumers?

Stefanie Dixon: Europe is a net exporter and, in my experience, foundries regularly restrict delivery slots because of soft order books, not a lack of scrap. Therefore, I don't believe there is currently an overall shortage. I do think Europe doesn't consistently generate enough of some of the specific high-quality scrap grades that many consumers ideally want, while at the same time producing significant volumes of more complex grades that require further processing.

Only a relatively small number of premium grades, think clean 1050, 1100, 6063 and clean wheels, can generally be placed directly with European foundries, without delay, throughout most of the year.  Even then, recyclers occasionally encounter reduced delivery slots during periods of weaker demand or seasonal shutdowns. The less widely consumed the alloy or scrap grade, the more likely recyclers are to experience periods where material has to be stockpiled or exported while waiting for demand to return.

From my own experience, I've seen foundries withdraw from the market for particular grades, not because they couldn't source scrap but because demand for their own finished products had weakened. That's one of the important gaps international markets help to close by providing an alternative outlet when domestic demand softens or domestic capacity is constrained. If Europe wants more clean 6063 extrusion, aerospace alloys or automotive sheet scrap, those materials first have to be manufactured in Europe. Recycling can only recover the products that enter the economy in the first place.

As products remain in service for many years, the post-consumer scrap generated today reflects manufacturing decisions made decades ago. As manufacturing evolves and new alloys are introduced, the recycling stream inevitably becomes more complex. Mixed grades are therefore unlikely to perfectly match the alloy demand of today's manufacturers. Design for Recycling has an important role to play in making that challenge easier for future generations.