LME reveals proposed layout plans for its LOW-CARBON aluminium trading platform

On Thursday, August 13, the London Metal Exchange laid out plans to create the much-intended low-carbon aluminium spot trading platform to support sustainable metal production. The platform is expected to play a growing role in the green energy transition enabling registered producers to voluntarily log their metal’s carbon-related details.

Starting with green and recycled aluminium, the platform intends to expand in the future into other sectors such as specialised alloys, and later on, into other metals as well.

For being the most energy-intensive industrial metal, aluminium is vital for the transition to a low-carbon economy. The vast majority of smelter use coal-fired power for producing primary aluminium. Some use renewable energy source and has long been calling for it to be recognised as a premium product.

The bourse is now seeking views on its proposals and expects to launch the trading system in the first half of 2021, as per the report yesterday.

The proposals in a paper issued to LME members also include the launch of a cash-settled contract for aluminium scrap generated by the United States drinks industry and scrap steel contracts for Taiwan and India. The proposals also mention the launch of a lithium contract at the same time.

LME chief executive officer Matthew Chamberlain said in an interview that the development of a low-carbon aluminium market platform is of utmost importance with a large number of traders moving into the sector and consumers such as Apple Inc partnering directly with green aluminium suppliers.

He told Reuters, "We are going to provide routes where buyers and sellers of metal with particular sustainability characteristics can come together."

"This online auction style solution will deliver access...on a voluntary basis to those who would like to buy or sell low carbon aluminium," the exchange said.

 The digital register, known as LMEpassport, will be used to store carbon-related details for aluminium.

 "Interested producers or metal owners could input the environmental criteria of their brands, certification by an industry scheme, recycled content, use of carbon offsets, or water or tailings management schemes," said the LME.