The US Aluminum Production Challenge and How to Fix It
By Joe Quinn, Vice President and Director of the SAFE Center for Strategic Industrial Materials
A necessary input into everything from passenger airplanes to kitchen appliances, aluminum is one of the foundational industrial materials of modern society. And, as with so many other important products and materials, America’s capacity to produce primary aluminum has dwindled to a perilously low level.
This is a danger. It is also an opportunity. There is an opportunity for America to take a leading role in more cleanly produced aluminum as part of a long overdue revival of domestic manufacturing. But seizing this moment requires the US government to pursue the right incentives and investments to make domestic aluminum production commercially viable again – despite its energy intensiveness, and as aluminum demand grows over the decades ahead.
The demand for aluminum will only grow, and grow faster, as the US economy transitions to mass adoption of electric vehicles and other clean energy systems – nearly all of which require increasing amounts of aluminum.
The case for action is clear. Aluminum is critical to economic and national security due to its defense, aerospace, electricity, and transportation uses. Notable military applications include armor plates for vehicles, aircraft structural parts and components, naval vessels, space and missile components, and propellants. And in the commercial and industrial space, aluminum is the most effective option for high-voltage long distance transmission lines – therefore necessary to keep lights on and factories humming. It is three times lighter and less than a third of the price of copper.
And this just scratches the surface of aluminum’s significance.
The demand for aluminum will only grow, and grow faster, as the US economy transitions to mass adoption of electric vehicles and other clean energy systems – nearly all of which require increasing amounts of aluminum.
The US government recognizes as much. The Biden Administration deems aluminum a “strategic and critical material.” The Commerce Department labels it “essential.” The Department of Defense identifies it as “a material of interest.”
Yet despite that awareness and even as demand for aluminum climbs, US domestic production continues to drop. Predatory Chinese trading practices were a major factor in reducing the US primary aluminum industry from nearly 40 smelters in the early 1990s – when the US led the world in primary production – to seven at the start of 2020. That number has dropped even further over the past three years to five after the closing of the Century Hawesville facility in Kentucky, which was the primary source of high-grade aluminum to the US military. Now the Middle East and China are the major producers of high-purity aluminum.
The main obstacle to a US aluminum resurgence is the cost of energy. The amount of electricity to produce aluminum exceeds that for any other comparable materials. And the price of electricity across the country spiked after the Russian invasion of Ukraine and remains high. Energy costs were the main factor leading to the Kentucky plant’s closure. Last year there was a serious effort – involving state and local governments, unions, and private equity– to reopen a primary production facility in Intalco, Washington, which closed in 2020. But the deal floundered, in large part because it lacked a long-term electricity contract with the Pacific Northwest’s main utility.
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