Aluminum is a carbon conundrum. It’s critical to the energy transition needed to reduce global greenhouse gas (GHG) emissions, since every powerline, wind turbine, solar panel and electric vehicle battery contains aluminum.
In other words, “to decarbonize the world, we need more aluminum,” said Ivan Vella, chief executive of aluminum at Rio Tinto (NYSE:RIO).
But aluminum smelting itself is highly carbon intensive. The smelting process not only produces carbon dioxide (CO2), but uses massive amounts of electricity, and if that electricity comes from coal power, a single tonne of aluminum can produce up to 16 tonnes of CO2.
Aluminum smelting is thus responsible for three per cent of the world’s total industrial emissions, according to the International Energy Agency.
So, what if you could get aluminum’s carbon intensity down to just two tonnes of CO2 per tonne of aluminum?
That’s being done already in Canada.
Thanks to abundant hydro-electric power, the aluminum produced in Quebec and B.C. has the lowest embedded carbon content in the world.
The same can be said for the zinc made at the Teck Resources Ltd. (NYSE:TECK; TSX:TECK.A,TECK.B) lead-zinc smelter in Trail, B.C. PwC recently confirmed in a report that zinc produced at Teck’s Trail smelter produces 0.93 tonnes of CO2 equivalent per tonne of zinc, compared to a global average of three to four tonnes of CO2 equivalent per tonne of zinc production.
At a recent investor presentation in London, England, Vella said Rio Tinto’s Canadian smelters belong to an “exclusive club” of low-carbon aluminum smelters.
Canada is the fourth-largest aluminum producer in the world, behind China, India and Russia. Its aluminum smelting capacity has grown while U.S. smelting capacity has dwindled, from nearly two dozen smelters 20 years ago to just five today.
“Our ambition is to grow our Canadian assets,” Vella told investors in London.
That growth could be constrained in B.C., however, due to limited power availability. Quebec has three times the power-generating capacity of B.C., and attempts by Rio Tinto to grow its power generating capacity in British Columbia have been squelched by previous government decisions, due to concerns over the impact on fish from Rio Tinto’s Kenney Dam and Kemano generation station.
Rio Tinto was able to increase production in Kitimat through a $6 billion modernization project in recent years that doubled its production capacity, while also reducing its output of GHGs.
Rio Tinto and Alcoa Corp. (NYSE:AA) are now jointly working on a process called ELYSIS that could get the aluminum produced in Canada down to zero emissions. The Canadian government is investing $80 million in the project and the government of Quebec has earmarked $60 million.
Making aluminum is a two-stage process that first requires alumina (aluminum oxide) to be extracted from bauxite.
Aluminum smelting uses large amounts of electricity to separate the aluminum from the oxygen atoms in the aluminum oxide. Carbon cathodes are used in this process, and when the oxygen combines with the carbon cathodes, it creates CO2. So, even if the power used in a smelter is 100 per cent renewable, an aluminum smelter is still going to produce CO2.
For 20 years, researchers at Rio Tinto and Alcoa have been trying to develop an “inert cathode” that eliminates the need for any carbon in the smelting process, and they now have something that is being used in a demonstration project.
“The technology involved here is right at the limit of science and physics,” Vella said. “This is extremely difficult.”
The ELYSIS technology is an “inert” cathode that is now being tested in a single cell at Rio Tinto’s Alma smelter in Saguenay-Lac-Saint-Jean, Quebec. Rio Tinto has a major customer lined up to buy its ELYSIS carbon-free aluminum. Apple (Nasdaq:AAPL) has invested in the ELYSIS technology and plans to be its first customer.
“The technology works,” Vella said. “Now it’s about scaling it and making it efficient.”
There are more than 300 cells in a smelter the size of Rio Tinto’s BC Works smelter in Kitimat. Rio Tinto already spent $6 billion to modernize the Kitimat smelter, so it may be some time yet before the new ELYSIS technology is rolled out at Kitimat, since retrofitting smelters with the new technology will be costly.
“By 2030 are we going to have it at Kitimat?” Vella asked. “Probably not. I don’t think it will ramp up that quickly.”
