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Aluminium mills invest to match can demand

Time of issue::2023-07-25 15:09

A review of recent new aluminium rolling mill announcements suggests that supplies are likely to meet growing demand for beverage cans. 

 

The massive increase in demand for aluminium beverage cans since 2020, resulting from the effects of the Covid pandemic and a move by brands for packaging more sustainable than plastics, has stressed the supply chain for rolled aluminium alloys.

 

Current global demand for aluminium beverage cans is more than 400 billion a year, with growth expected to be around 5% compound for the next five years, despite last year’s dip. That equates to almost 7 million tonnes of aluminium a year and growing, according to London-based research group CRU International.

 

Prior to 2020 there had been a large increase in demand from the automotive industry for rolled aluminium, which has been produced in the same mills as aluminium for packaging, and, as a result, the supply of canstock was under pressure.

 

The North American flat-rolled aluminium industry has a substantial and growing supply deficit estimated at more than 2 million tonnes, based largely on increasing demand from the automotive and beverage can industries.

 

This lack of availability has impacted automotive producers’ ability to secure supply. The supply deficit is currently being addressed through imports of highercost aluminium flat-rolled products, which exceeded 25% of North American consumption in 2021.

 

In response, the leading aluminium rolling mills have revealed expansion plans, including three new mills to be built on greenfield sites. These plans all include increased recycling capability which helps to keep the cost of the product low, as well as reducing energy consumption in production, and therefore equivalent carbon dioxide emissions.

 

Two new entrants to the North American market have announced projects, each expected to add about 650,000 tonnes a year of rolled material to the market.

 

The project by Aluminium Dynamics for a new mill in Western Lowndes County, Mississippi, broke ground in early 2023 with production expected in early 2025. This project – estimated to cost US$2.5 billion – will be managed by Steel Dynamics, and Unity Aluminium will hold a 6% share and provide knowhow. The output will be aimed at 45% for packaging, 33% for the automotive sector, and the balance for general flat products. The mill will supply about half of its slab requirements with remainder coming from two recycling and slab casting plants.

 

The other new project is a flat rolling mill at Los Lunas in New Mexico. This will be funded by Manna Capital Partners, and Ball Corporation has agreed to support the output, and possibly take a small equity stake. It will produce only packaging material and will be supported by a recycling unit producing slabs. Commissioning of the $2bn mill is expected to be in 2026 and capacity will be 1.3bn pounds (around 580,000 tons) a year.

 

A third new mill is also being constructed by global canstock industry leader Novelis at Bay Minette in Alabama, also at a cost of $2.5bn.

 

Initial capacity is stated at 600,000 tonnes of aluminium canstock, with a possibility of producing automotive body sheet as well. Like the other two mill projects it will be fully integrated with used beverage can (USB) recycling facilities producing what is described as ‘low carbon’ material with start-up expected in mid-2025.

 

Expansions at existing mills are in hand, with $130m being spent by Novelis at its Oswego mill in upper New York State to increase annual hot rolling capacity by 124,000 tonnes, and enhancing recycling and finishing equipment for packaging and automotive body use.

 

The Logan mill in Kentucky, a joint venture between Novelis and Tri Arrows, a Japanese based company, supplies about 45% of US canstock as well as automotive body sheet. Plans to expand capacity have been in hand since 2015, with a new cold mill currently being installed.

 

Kaiser Aluminum re-entered the can industry by recently purchasing Alcoa’s mill at Warrick in Indiana. This mill traditionally produced mainly end and tab stock, with body stock capability, and Kaiser says it plans to produce additional body stock. The plant will continue to be supplied with liquid aluminium from Alcoa’s smelter on the site. Total capacity is reported as 310,000 tonnes a year.

 

Arconic, which was spun off from Alcoa in 2016 as a specialist in aluminium finished products, operates a mill in Tennessee, which was specifically rebuilt in the past to produce can body stock. However, when Arconic was formed it was agreed that it would not produce canstock. However, in late 2022 Arconic announced that it would be offering can body stock again from the Tennessee mill, with Alcoa’s agreement. The mill’s capacity is in excess of 800,000 tonnes, but conversion back to can body stock will be a slow process.

 

The other producer in the USA, Constellium with its mill at Muscle Shoals in Alabama, has announced no specific expansion plans, but has been developing its automotive sheet capability significantly, which will have required extra capacity in the rolling mills.

 

In Europe there are four sites producing canstock. The massive Norf mill in Germany is a joint venture between Novelis and Speira, a company wholly-owned by KPS Capital Partners which is based in Norway. It is the largest aluminium rolling mill in the world, producing hot and cold rolled coils for finishing at the partner’s mills in Germany with an output of all finished products totalling 1.5 million tonnes a year. The main products are canstock, autobody, foil and litho printing plates. The plant is more than 50 years old and has been continuously expanded in recent years. Recent key projects have included the complete rebuild of the No1 hot strip mill, and large investments in facilities for recycling can and automotive body scrap into slabs, for rolling into new products.

 

Constellium’s mill at Neuf-Brisach in France was originally built on the same lines as the Norf mill, but incorporates the finishing equipment on the site. With capacity for 450,000 tonnes a year, its main products are canstock and automotive body sheet, and the most recent expansion plan includes enhanced recycling capacity for UBCs and scrap from canmaking and automotive body plants.

 

In Russia, where western-based companies have been pulling out of the economy in response to the Ukraine war, the Samara Metallurgical Plant, one of the largest producers of semi-finished products in the country, was sold by Arconic to Industrial Investments for US$230 million, much below its real value. Its capacity in 2021 was 260,000 tons a year, much of which was sold to canmakers in Russia.

 

Europe’s fourth mill producing canstock is owned by Elval-Harcor in Greece. The rolling division is operated by Elval at Oinofyta at a mill north of Athens. The first stage in Elval’s expansion plan was the installation of a fourstand tandem hot rolling mill in 2020. This increased hot rolling capacity to more than 500,000 tonnes per year. The second stage will be 50% financed by a loan of €75m from the European Investment Bank. This will include a second cold rolling mill, a new lacquering line, a new melting furnace as well as significant slab processing facilities.

 

Other global capacity for making aluminium used for packaging includes Hindalco’s Hirakud flat-rolled products mill at Oshida in India. The mill – with a total yearly aluminium product capacity of 135,000 tonnes – is part of the giant Aditya Birla group that also owns Novelis. When the mill recently received dual certification from the Aluminium Stewardship Initiative, management made a point that it is the first to produce aluminium canstock in the country, which nevertheless remains a minor producer of beverage cans in the region.

 

In Brazil, Novelis completed a $150m investment at its Pindamonhangaba mill in 2021 and capacity was expected to be increased to 680,000 tonnes a year, with 490,000 tonnes for recycling. Novelis has also invested heavily in its South Korea operations.

 

All these developments – expected to add at least another 2 million tonnes of global rolling capacity – will underpin the expected growth in demand for aluminium beverage cans, as well as the increasing demand for automotive body material in support of the growing market for electric vehicles. While there are a limited number of plants worldwide producing these materials, it would appear that the companies operating these mills are ready to invest to meet the expected rising demand for aluminium beverage cans.

 

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