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The aluminium incentive price – time to take projects off the shelf and blow the dust off

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06 April 2022

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:

  • Document

    The aluminium incentive price – time to take projects off the shelf and blow the dust off

    PDF 1.01 MB

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