Aluminum is the second most widely used metal in the world, second only to iron, and represents in some ways the industrialization and modernization of the world, vital in transportation, construction, utilities, food and electronics. It is used in everything from beer cans to iPhones.

The price of aluminum has hit a 13-year high due to the worsening energy crisis, which has reduced supplies of the metal. On Monday, aluminum rose 2.8% on the London Metal Exchange to $3,049 a tonne, the highest price since July 2008, triggering a widespread rise in base metals.

Aluminium prices

One of the main causes of this price rise is the energy-intensive nature of aluminum production. Aluminum is the most emissions-intensive metal per dollar, with 10.2 kg C02e/$, well above steel, with 5.3 kg, and zinc, with 1.9 kg.

Aluminum extraction is a very costly and energy-intensive process, known in the industry as “solid electricity”. Each ton of metal requires about 14 megawatt-hours of energy for its production. If the 65 million ton per year aluminum industry were a country, it would be the fifth largest energy consumer in the world. Therefore, with the significant increase in energy prices, the cost of aluminum production has also skyrocketed.

Another cause of this price rise has been the fact that China has turned its attention to this metal to curb its overall industrial energy consumption. Aluminum production accounts for about 4% of China’s total carbon emissions. To curb emission levels, Beijing has placed a hard cap on future capacity, which promises to end years of overexpansion and raises the prospect of deep global deficits.

In addition, a military coup in Guinea that took place last month put further pressure on aluminum prices. Guinea has some of the world’s largest reserves of bauxite, used to produce aluminum oxide, and is a major supplier to China.

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