Aluminium, unlike many other materials, retains its properties after infinite recycling. This makes it the ultimate circular metal, with far-reaching implications for both sustainability and economics. Producing recycled (secondary) aluminium consumes only 5 per cent of the energy and produces less than 5 per cent of the CO₂ emissions compared to primary aluminium made from bauxite via electrolysis.

According to the International Aluminium Institute (IAI):

• In 2023, the world produced over 98 million tonnes of aluminium.
• Of this, approximately 32 million tonnes (33 per cent) came from recycled sources.
• By 2040, over half of the global aluminium supply will come from scrap-based production.

This structural transformation is not just about climate goals — it’s a response to resource constraints, cost pressures, and industrial resilience in a multipolar geopolitical world.

Why are major economies shifting focus to aluminium recycling?

The European Union, China, the United States and India are aligning aluminium policy with decarbonisation roadmaps and trade competitiveness:

EU:

• The Carbon Border Adjustment Mechanism (CBAM) will penalise imports of high-carbon aluminium, favouring secondary aluminium producers with low carbon footprints.
• The EU Green Deal explicitly targets a circular economy, setting ambitious targets for aluminium packaging, construction, and the auto sectors.

China:

• With an energy-intensive primary aluminium industry (mostly coal-fired), China imposed production caps and is now the world’s largest producer of recycled aluminium, generating over 14 million tonnes in 2023.
• The country’s 2020 policy to reclassify specific scrap grades as “resources” helped reopen scrap imports, crucial for feeding new secondary smelters.

United States:

• Secondary aluminium accounts for a significant portion of U.S. aluminium production, with strong scrap recovery systems.
• The Bipartisan Infrastructure Law (officially known as the Infrastructure Investment and Jobs Act (IIJA)) promotes the use of low-carbon materials.

India:

• As a net importer of scrap, India is developing domestic scrap collection systems and policies to discourage the export of raw scrap.
• With aluminium demand expected to rise to 12 million tonnes by 2030, recycled aluminium will bridge supply gaps.

Why primary smelters are now investing in secondary aluminium

Once dominated by specialised players like Novelis, Real Alloy, and regional recyclers, the secondary aluminium market is now witnessing a significant shift as major primary producers — including EGA, Ma’aden, Hydro, Rio Tinto, and a few others — enter the space. These industry giants are expanding their presence through a combination of greenfield investments, brownfield upgrades, and strategic acquisitions of secondary aluminium facilities, signalling a broader industrial shift toward circularity and low-carbon growth.

Key drivers behind the shift from primary to secondary aluminium

The transition from primary aluminium production to increased investment in secondary aluminium by traditional smelters is being shaped by a confluence of economic, environmental, and geopolitical factors. Here’s an in-depth look at the three primary drivers:

1. Emission reduction targets and the decarbonisation imperative

Primary aluminium production is one of the most energy-intensive and carbon-emitting industrial processes in the world. Producing 1 tonne of primary aluminium emits an average of 11–16 tonnes of CO₂-equivalent, primarily due to:

• Electricity consumption in electrolysis (typically coal-powered in China and India)
• Process emissions (e.g., from anode baking and calcination)
• Fossil fuel-based heat requirements

In contrast, secondary aluminium production — from recycled scrap — uses only 5 per cent of the energy required for primary, and emits over 90 per cent less CO₂. According to the IAI:

• Recycled aluminium has an average carbon intensity of ~0.5–1.5 t CO₂/tonne, depending on energy sources.
• This makes it the easiest and most immediate lever for producers to decarbonise their product portfolio.

As major aluminium buyers (automakers, electronics, packaging companies) commit to Scope 3 emission reductions, pressure is cascading upstream to smelters. Transitioning to secondary aluminium presents a cost-effective pathway to meet emissions targets, secure ESG-linked financing, and align with carbon regulations such as the EU’s CBAM.

2. The rise of “green aluminium” and price premiums

Buyers in the automotive, aerospace, electronics, and beverage sectors are increasingly demanding low-carbon aluminium, creating a two-tier market:

• Standard aluminium, priced near LME benchmarks
• Low-carbon or “green aluminium” is forecasted to be modest by 2030

For instance:

• Hydro’s CIRCAL and Hydro REDUXA, as well as Rio Tinto’s RenewAl, are branded green aluminium products with verifiable emissions under 4.0 t CO₂/tonne.
• These products are utilised in electric vehicles (EVs), sustainable buildings, and eco-conscious packaging solutions.
• Certifications like the Aluminium Stewardship Initiative (ASI) and Carbon Trust Verified are further legitimising this price premium.

Primary smelters consider secondary production as an opportunity to enter the green aluminium market more quickly and cost-effectively, without the massive capital expenditure needed to decarbonise primary production (e.g., inert anodes, hydroelectric-powered smelting, CCS).

3. Scrap security = Strategic security

In a world of unpredictable trade flows, escalating resource nationalism, and growing industrial self-reliance, aluminium scrap has emerged as a strategic raw material. This is particularly true as recycled aluminium gains importance in national industrial policy and green transition strategies.

Here’s why scrap security is becoming a strategic imperative:

• Secondary production is entirely scrap-dependent — no scrap, no metal.
• Scrap demand is soaring, but regional availability, export bans and informal recycling in developing economies constrain supply.
• Geopolitical tensions and trade disruptions are fragmenting global scrap markets. Recent examples:
  
• India, UAE, Malaysia, and Indonesia have periodically restricted scrap exports to promote domestic recycling.
• China’s reclassification of aluminium scrap and quality restrictions throttled imports before policy adjustments in 2020.
• Sea shipping disruptions, the Russia-Ukraine war, and tariff wars (e.g., U.S. Section 232) have further complicated logistics.

In response, aluminium producers are:

• Investing in domestic collection systems and urban mining programs to control post-consumer scrap at source
• Creating closed-loop supply chains with automakers, can makers, and OEMs to retain clean scrap.
• Signing long-term procurement agreements with dismantlers, recyclers, and scrap aggregators
• Deploying AI and advanced sorting to extract higher volumes of usable scrap from complex waste streams

Many countries and companies now view aluminium scrap the way they once viewed bauxite or alumina: as a strategic resource that needs safeguarding, localisation, and supply chain control.

As a result, the aluminium industry is entering an era where “scrap independence” may determine competitiveness, resilience, and sustainability in equal measure.

Conclusion

Scrap is no longer waste — it’s the future

The aluminium industry is undergoing a once-in-a-generation transformation. Driven by climate commitments, resource constraints, and shifting trade dynamics, recycling is no longer optional — it’s foundational. As recycled aluminium moves from the sidelines to the centre of global supply strategies, scrap has become a critical, strategic resource, not just for sustainability, but for industrial resilience and competitiveness.

Major primary producers are no longer watching from the sidelines. Whether through greenfield recycling projects, brownfield facility upgrades, or acquisitions of secondary units, industry leaders are investing heavily to secure their future in a circular economy. Meanwhile, the rise of green aluminium premiums, closed-loop systems, and regional scrap ecosystems is redrawing global value chains.

In this evolving landscape, the companies and countries that control aluminium scrap and master its transformation into low-carbon metal will define the next era of industrial leadership.

Stay ahead with insight-driven intelligence

To explore these trends in greater depth — including region-wise demand projections, policy impacts, pricing trajectories, and strategic moves by key industry players — I invite you to subscribe to AL Circle’s in-depth report, “World Recycled Aluminium Market Analysis & Industry Forecast to 2032“, an exclusive, industry-focused research document designed for professionals navigating the future of aluminium.