Insight
The aluminium incentive price and the impact of carbon emissions and new technologies
Report summary
We model generic smelters using a mix of greenfield and brownfield projects. We estimate, based on our Cost Service, their respective capital requirements and long run operating costs. In formulating our view, we use a financial-based model. Given a project’s capex and operating cost, the incentive price for that project is the price that generates a cashflow to provide a specific rate of return, which varies between 8% and 13% according to the location of the project. The average incentive price is the (production) weighted average of all the modelled projects.
Table of contents
- The environment for aluminium smelters is changing rapidly
- Which countries are likely to host new aluminium capacity?
- Base case aluminium incentive price
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Risks to our base case
- The price to pay for carbon emissions
- and the benefits of non-carbon electrolytic cells
- Base case alumina incentive price
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Which countries are likely to host new alumina capacity?
- India has enough bauxite resources and appetite for investment in the aluminium value chain.
Tables and charts
This report includes 3 images and tables including:
- Required rate of return per country
- Aluminium: capital intensity vs. incentive price of projects
- Alumina: capital intensity vs. incentive price of projects
What's included
This report contains:
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