At the Aluminum Association’s annual meeting in Washington this September, the topic that dominated was not tariffs, not trade, but energy. As the US government doubles down on its Made in America agenda, aiming to restore domestic aluminium production, executives warned that the dream of a primary aluminium revival may ultimately hinge on one factor alone: affordable electricity.
Aluminium has always been an energy story disguised as a metal story. It takes immense electricity to turn alumina into molten aluminium — roughly 11 terawatt-hours (TWh) per smelter every year, enough to power a city like Boston or Nashville.
“When you think about the energy intensity that is required for an aluminium smelter, you’re talking about basically powering a city,” Kelly Thomas, Aluminum Association vice chairperson, said at a press roundtable on September 18.
Electricity makes up nearly 40 per cent of total production costs, and 80 per cent of the industry’s emissions stem directly from power use. A financially viable smelter needs long-term energy contracts at around USD 40 per megawatt-hour (MWh), yet current US industrial rates are far higher — USD 65 to USD 82 per MWh in many states. By comparison, hydro-rich Canada offers smelters rates between USD 26 and USD 41 per MWh, fuelling its dominance as the US’s main aluminium supplier.
Read the report “ALuminium Wires & Cables - Insights & Forecast to 2030” to know more about aluminium use in electricity.
The Aluminum Association estimates it would take five new smelters, each costing USD 4–6 billion and consuming city-scale power, to replace the 4.4 million tonnes the US imports annually.
Tariffs lift prices but not the industry
Trump’s expansion of Section 232 aluminium tariffs was supposed to spur investment and revive idle smelters. The tariffs did push the Midwest premium up to 74–76 cents per lb in late September — but smelter activity remains limited.
“Building more US-based aluminium smelters is a laudable goal, but making that happen is much more a function of energy than of tariffs,” Thomas said.
Century Aluminum, the largest US producer, announced a USD 50 million investment to restart part of its Mt. Holly smelter in South Carolina, bringing back 50,000 tonnes of production by mid-2026. Yet, the company and its peers continue to stress that no long-term investment will move forward without secure, low-cost power.
How Deregulation dimmed America’s smelting power
In 1980, the United States produced 4.65 million tonnes of aluminium across 33 sites. Today, only four smelters survive — two owned by Century Aluminum, two by Alcoa — and just half operate at full capacity.
The Aluminum Association attributes the sector’s collapse to the deregulation of electricity markets that began in 1977. As cheap, long-term power contracts vanished, industrial rates soared.
Now, the few remaining smelters are left fighting to stay competitive while Canadian producers — powered by renewable hydro — dominate the North American market.
New generation of smelters faces an old problem
Two companies are attempting what no one has done in nearly half a century: build new US smelters.
Emirates Global Aluminum (EGA) has chosen Tulsa Port of Inola in Oklahoma as the site for a new plant and is negotiating with the Public Service Company of Oklahoma for power. Meanwhile, Century Aluminum continues searching for a location where it can secure affordable, long-term energy.
“Century needs enormous quantities of reliable, uninterrupted, low-cost electricity,” Sartor said. “Most regions simply can’t provide that level of clean, stable power.”
The challenge is not desire, but feasibility. Even with tariffs and government support, smelting cannot expand without a guaranteed supply of cheap energy — and in the current US grid, that’s increasingly scarce.
Aluminium’s new rival: Artificial intelligence
The aluminium industry’s biggest competitor for power isn’t another metal — it’s AI.
Data centers — the backbone of artificial intelligence — are rapidly devouring the nation’s electricity. According to the US Department of Energy, data centers used 176 TWh of power in 2023 and could consume up to 580 TWh by 2028, or 6.7–12 per cent of all US electricity.
“Smelters now have to compete with companies like Microsoft and Google, who have no limit on what they’ll pay for power,” Sartor said.
The Aluminum Association pointed to Microsoft’s deal with Constellation Energy to restart a nuclear reactor at Three Mile Island, with analysts estimating power prices at USD 115 per MWh — nearly triple what a smelter can afford.
“Aluminium is connected to energy, it’s the most important input,” Michael McKenna, president of MWR Strategies, told market participants at the Aluminum Association’s annual meeting.
Trump’s energy vision: Fossil fuels, renewables, and the nuclear bet
President Donald Trump’s second-term agenda focuses on expanding domestic energy to ensure affordable, reliable power. His administration plans to boost natural gas output and fast-track pipeline approvals to stabilise supply.
At the same time, the proposed One Big Beautiful Bill Act would roll back key Inflation Reduction Act (IRA) incentives, potentially slowing renewable investment and increasing reliance on fossil fuels. Critics warn this could weaken US competitiveness in clean energy innovation.
The administration is also exploring nuclear power — particularly small modular reactors (SMRs) — as a bridge between fossil fuels and renewables. However, widespread deployment is expected to take years.
A model for this approach already exists: Emirates Global Aluminum recently produced low-carbon aluminium powered by the Barakah Nuclear Energy Plant in the UAE, showcasing how nuclear energy can drive industrial decarbonisation — a path the US may soon consider.
As electrification spreads across transport, industry, and data infrastructure, the United States faces a new kind of industrial race — not for resources, but for reliable energy. For aluminium producers, that race determines everything: whether smelters can reopen, whether new ones can rise, and whether the nation’s pledge to rebuild domestic manufacturing can be realized.
“The government thought tariffs would encourage new smelting,” said Lucy Winchel, aluminium director at Traxys Global. “But you can’t run a smelter on policy — you need power.”
In an era where AI servers and smelter pots compete for megawatts, the question isn’t whether America wants more aluminium — it’s whether it can afford to power it.
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