Russia provides roughly 6 percent of the aluminum the U.S. uses in smelters and the prices have gone up in addition to a surge in supply disruption in light of the recent warfare.
The flipside of this situation is that scrap value is seeing a wave of momentum. Companies are investing in equipment and ramping up operations to handle recycling scrap in order to meet the increased demand for aluminum.
Aluminum makers are searching for any source of aluminum including old cans, shredded cars and factory discards to fill orders. These companies are investing in recycling and melting more scrap to increase their output.
Companies such as Norsk Hydro ASA, Novelis and Matalco are opening U.S. plants so they can produce more of the lightweight metal utilized by auto companies, beverage can makers and other manufacturers. U.S. aluminum consumption grew by 11 percent last year, bouncing back from 2020’s pandemic-influenced reduction, according to the Aluminum Association trade group.
In 2021, Norsk Hydro broke ground on a new plant in Cassopolis, Michigan that will annually produce 120,000 metric tons of new aluminum using scrap. The new facility is expected to cost $140 million and should be completed by the end of 2023.
Many aluminum producers have arrangements with their customers to buy back scrap waste generated from production. This is often perceived to be most valuable because it’s considered to be ‘clean’ and ready to recycle.
Novelis is another company with plans to expand operations to include more facilities capable of melting down scrap and producing aluminum ingots. Their newest plant will be based in Guthrie, Kentucky and will be able to make 240,000 metric tons of ingots annually. The project has an estimated cost of $365 million and is scheduled for completion in 2024. They plan to roll the metal from the new plant into aluminum sheet for automotive customers.
Once the major components of a vehicle are pulled, including the engines, transmissions and wheels, most of the remaining body parts are shredded, creating a mix of copper, aluminum and other metals. This is often shipped overseas, where it’s further processed, pulling the aluminum which is melted again for creating new aluminum parts.
Beyond vehicles, aluminum is one of the materials with the highest recovery rates from consumer households. Approximately 70 percent of new cans are made from recycled cans. The Can Manufacturers Institute reports that roughly 60 billion cans are never recovered and they’ve set a goal to raise that rate to 70 percent by 2030.
The current industry climate is making the incentive to collect and recycle scrap more lucrative on every scale.