“Strategic Loads” report warns that trade policy alone cannot sustain domestic aluminum production without affordable, reliable power
Washington, D.C. — SAFE’s Center for Strategic Industrial Materials today released a new report, Strategic Loads: America’s Aluminum Deficit is an Energy Problem, warning that the decline of U.S. primary aluminum production is fundamentally a challenge of electricity cost and reliability. Without action to ensure long-term access to affordable power, domestic aluminum capacity needed for defense and wartime mobilization will continue to decline.
“A recent Pentagon war game planned for defense demand for aluminum to increase fivefold in a conflict. Today, America imports most of its primary aluminum and has lost the last smelter capable of producing high-purity, military-grade metal. You can’t build a smelter in the middle of a war.
The capacity we have when a conflict begins is the capacity we fight with, and reliable, affordable power is what keeps it running,” said Joe Quinn, Executive Director of SAFE’s Center for Strategic Industrial Materials.
Defense Aluminum Depends on a Healthy Commercial Base
Aluminum is essential for airframes, munitions, and other defense applications. Although defense procurement accounts for only about five percent of domestic primary aluminum demand, a primary smelter cannot operate economically to serve defense demand alone. Defense production, therefore, depends on a broader commercial base capable of sustaining the capacity, workforce, and infrastructure needed to supply military requirements. This echoes a key finding of SAFE’s 2025 Pillars of Power report.
Aluminum Smelting Demands Affordable, Resilient Power
The report finds that smelting aluminum consumes 13 to 16 megawatt-hours (MWh) of electricity per metric ton, with power accounting for roughly 40 percent of production costs. What’s more, power outages only lasting a few hours can freeze a potline and require months of repairs and significant capital expense – making reliable flow electricity essential.
The United States was once the world’s largest producer of primary aluminum. China now accounts for roughly 60 percent of global output and production has shifted toward regions offering large volumes of low-cost, reliable electricity, like Chinese coal, Canadian hydropower, and Gulf natural gas. Today, five U.S. primary smelters remain in operation and roughly 84 percent of the primary aluminum the country consumes is imported.
Aluminum Producers Compete for Power with Data Centers
A new smelter requires decades of electricity priced near $40 per MWh, but U.S. industrial rates averaged $81 per MWh in 2024, while data centers have demonstrated the ability to sustain operations near $115 per MWh. This gap places aluminum producers in direct competition for electricity with customers that can absorb substantially higher power costs.
Trade policy and tariffs have helped spur investment, but reliable power on commercially viable terms remains necessary for sustained production.
SAFE Calls for Congressional and Federal Action on Strategic Industrial Loads
The United States must build an energy system that sustains and grows its domestic manufacturing while also building infrastructure for artificial intelligence if it is to maintain its economic strength, technological leadership, and national security advantage. However, smelters and data centers are now in direct competition for the same interconnection resources, and smelters are losing.
The “Strategic Loads” report recommends the following top actions for Congress, the federal government, utilities, and smelters to undertake:
- Congress should authorize a targeted, price-indexed power cost offset for aluminum capacity necessary to meet defense and mobilization requirements.
- Congress should appropriate funds to help modernize the smelter fleet, improve energy efficiency, and reduce the long-term cost of maintaining strategic capacity.
- The Department of War and Department of Energy should designate defense critical industrial loads and preserve their access to critical energy infrastructure.
- Utilities and smelters should work to increase power flexibility.
- The U.S. government should treat scrap as a strategic asset and expand domestic secondary production.
- Congress should require the Secretary of War to report on the state of the aluminum industry.
