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May 06, 2023

By Michael Hogan

4 Min Read

HAMBURG (Reuters) - Moves to reduce plastic packaging to protect the environment are starting to increase demand for aluminium packaging, the European head of Novelis [NVLX.UL], the world's largest producer of rolled aluminium products, said.

Aluminium demand will also be underpinned by a trend towards more electrically powered cars, Novelis senior vice president and Europe president Emilio Braghi told Reuters in an interview for LME Week, an event for the global metal industry.

"Consumers want more sustainable beverage packaging options, which is having a direct and positive impact on aluminium demand as aluminium cans provide a sustainable alternative to single-use plastic bottles," Braghi said.

"Some of the world's biggest beverage brands have recently announced they will address the plastic waste challenge by introducing new aluminium packaging for water."

The aluminium industry is working to convince food and other packagers that the metal provides an environmentally friendly alternative to plastic, he said.

"A beverage can that is recycled today can be back on store shelves in just 60 days," he said. "Cans made from recycled aluminium save 95% of the energy required to make a new can and aluminium can be recycled infinitively without losing quality.

"This makes it a valuable resource instead of using packaging materials that end up in the oceans."

The most important driver of the growing demand for flat-rolled products (FRP) continues to be the transport industry, and particularly the automotive sector, Braghi said. "The number of electric vehicles is expected to increase significantly and the demand for aluminium is expected to multiply tenfold by 2030 compared to 2017," he said.

"With the new generation vehicles, the functional requirements for car body construction will change ... Examples for new applications are battery cases or high-voltage components, the integration of electric motors, a modified weight distribution or safety concepts."

Novelis has production and recycling operations in Germany, Italy, Britain, France and Switzerland. In 2014 it opened a $258 million aluminium recycling plant in Germany to produce 400,000 tonnes of aluminium annually using scrap.

He called on more European countries to intensify efforts to raise collection of waste packing for recycling.

"In Germany, the recycling rate of cans is 99%, in Switzerland the rate amounts to around 90%," he said.

"Countries with a lower recycling rate should put in place efficient collection and sorting systems, which would increase the availability and quality of aluminium scrap and allow for achieving even greater levels of aluminium can/packaging recycling."

Novelis, a unit of India's Hindalco Industries, is seeking to take over fellow aluminium products producer Aleris Corp in a $2.6 billion deal.

In September, the U.S. Justice Department filed a lawsuit aimed at stopping the takeover, but European Union competition authorities approved it in October. "Bringing Novelis and Aleris together will benefit our customers, employees and the aluminium industry as a whole," Braghi said.

"This will strengthen our ability to compete against steel in the automotive market, meet growing customer demand for aluminium, achieve our recycling goals, and bolster our sustainability platform worldwide.

"In addition, it will further enhance our strategic position in Asia and diversify our overall product portfolio."

Reporting by Michael Hogan; Editing by David Holmes

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