Daily Management Review

Plans Of Launching Low Carbon Aluminum Platform By London Metal Exchange


Plans of launching of a spot trading platform for low carbon aluminum as well as a register where producers can voluntarily log their metal’s carbon-related details with the aim to support sustainable metal production was outlines by the London Metal Exchange on Thursday.
While the plan also include looking at other metals eventually, for a start the LME wants to being with aluminum since power is major component which sometimes goes up to 40 per cent in the smelting process.
Even though manufacturing of aluminum requires a large amount of energy, this metal has become very crucial for the transition to a lower carbon economy which includes its extensive use in the auto sector where the metal is highly valued because of its very light weight compared to that of steel and its characteristics of being infinitely recyclable.
These plans and proposals were issued to the members of LME and also included plans for the launching of a cash-settled contract for aluminum scrap generated by the drinks industry of the United States and scrap steel contracts for Taiwan and India in the first half of next year.
At the same time, the exchange also plans to launch a lithium contract.
But even though the 142-year old exchange is aiming to build consensus, there is virtually no agreement within the industry about how metals can transition to a low carbon economy.
“We are going to provide routes where buyers and sellers of metal with particular sustainability characteristics can come together,” LME Chief Executive Matthew Chamberlain told the media.
Price discovery and trading of sustainably-sourced metal will be facilitated by the spot platform.
“This online auction style solution will deliver access...on a voluntary basis to those who would like to buy or sell low carbon aluminum,” the exchange said.
Storing of carbon related details for aluminum will be done with the digital register which is known as LMEpassport.
“Interested producers or metal owners could input the environmental criteria of their brands, certification by an industry scheme, recycled content, use of carbon offsets, or water or tailings management schemes,” the LME said.
The deadline for feedback on the proposals is September 24. It is expected that a detailed analysis of the feedback will be published in the fourth quarter and in the first half of 2021, the exchange is expected to launch the spot trading platform and LMEpassport.