Norsk Hydro and Hindalco oppose LME’s plans for a separate low-carbon aluminium trading platform

According to a recent report, some of the world’s largest aluminium producers like Norwegian group Norsk Hydro and India’s Hindalco Industries are resisting the London Metals Exchange’s plans of launching a “green aluminium” trading platform. The news came after the companies said they both opposed proposals by the LME to build a separate contract for trading lower carbon aluminium.

In August, the LME announced its plans for a separate spot exchange to trade low-carbon aluminium, the first trading platform based on the environmental footprint in the exchange’s 143-year history.

The LME thought a separate trading venue for low-carbon aluminium could help determine if customers were willing to pay a premium for greener metal. That, in turn, would incentivise the industry to lower its carbon footprint, according to the LME. But Hilde Merete Aasheim, chief executive of Norsk Hydro, explained that a separate low-carbon aluminium trading contract would weaken the standards and efforts of decarbonising the energy-intensive industry.

She said, “We are a little bit afraid you will commoditise a specialised product. There are a number of green products out there — you have to be precise about what is your [carbon] content, it’s not one standard calculation.”

Ms Aasheim also said Norsk Hydro worried that the LME’s exchange would bundle multiple low-carbon standards together and set a threshold for “green aluminium” that was too low.

Meanwhile, Satish Pai, managing director of Hindalco Industries, said a potential focus on the energy used to produce aluminium would lead to overlooking other issues in the supply chain, such as the mining of bauxite.

“The concept of green aluminium is being hijacked for economic benefits by a few companies,” Mr Pai said. “It’s a concept that needs to be looked at from a holistic environmental and sustainability point of view across the whole value chain.”

En+ Group, on the other hand, praised the LME’s plans and said every aluminium producer should disclose its carbon footprint to the exchange.

The LME said, “We welcome all views in respect of our proposed sustainability strategy and are considering the feedback we’ve received as part of the discussion paper process.”