Insight
The aluminium incentive price – time to take projects off the shelf and blow the dust off
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
- Context
- Find clean energy – or pay the cost
- Base case incentive price for aluminium
- Our price forecast for aluminium supports investment
- Alumina refinery incentive price unchanged at US$350/t
- Assumptions used to construct incentive prices
- Risks around the incentive price
Tables and charts
This report includes 4 images and tables including:
- Aluminium incentive price, capital intensity and location
- Long term price forecast at US$3000/t (real 2022 $) – Incentive price US$2400
- Alumina incentive price, capital intensity and location
- Required rates of return by country used in the calculations
What's included
This report contains:
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