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The aluminium incentive price and the impact of carbon emissions and new technologies

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14 April 2021

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
    • The price to pay for carbon emissions
    • and the benefits of non-carbon electrolytic cells
  • Base case alumina incentive price
    • 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:

  • Document

    The aluminium incentive price and the impact of carbon emissions and new technologies

    PDF 910.05 KB