How ASI certifications impact the aluminum market

How ASI certifications impact the aluminum market

Aluminium Stewardship Initiative’s certification program likely to create price premiums and greater market access for certified companies.


In the last month, more manufacturers have achieved the Aluminium Stewardship Initiative’s (ASI) Performance Standard (PS) certification. Xiamen, China-based Xiashun Aluminium Foil is the fifth Chinese company to achieve the certification. Stockholm-based Gränges' Shanghai facility, which produces aluminum strips and plates used for the auto industry, became certified in July. In addition, Australia-based Amcor, which uses aluminum in food, drink and pharmaceuticals packaging, certified its Singen, Germany, operation to ASI’s PS standard and Chain of Custody (CoC) standard.

London-based CRU Group attended the ASI conference in early June in Norway. Following the conference, analyst Lais Santos provided insight on how the certifications are likely to create a “premium market” for responsibly sourced aluminum.

Certification overview

ASI is a nonprofit that aims to administer a third-party certification program for the aluminum value chain. ASI’s program is comprised of the PS and CoC standard, both of which are applicable to all stages of aluminum production, from mining to remelting of recycled scrap. It also covers criteria relevant to downstream users of aluminum.

ASI members are classified in six groups: Associations, civil society, downstream supporters, general supporters, industrial users and production and transformation. ASI founding members include Switzerland-based Nespresso, London-based Rio Tinto and Massachusetts-based AMAG.

ASI members in the production and transformation and industrial users categories are required to obtain a PS certification for at least part of their operations within two years of joining ASI.

On the other hand, ASI’s CoC standard is “voluntary” and can impact the value chain since the suppliers to a CoC certified product will also need to hold the same certification. CRU expects the commercial value for ASI-certified aluminum to be captured in this step of certification.

The criteria covered by the certification covers eleven topics in governance, environment and social aspects. Industrial users and other manufacturers are typically subject to only the material stewardship criteria whereas production and transformation members are subject to all criteria.

Chinese companies get on board

As China has become a “giant” in aluminum production, aluminum producers outside China are focused on how to differentiate themselves and to protect their markets from Chinese competition, especially because Chinese aluminum is normally cheaper than aluminum produced globally. However, Chinese competitiveness is impacted by “less stringent” corporate responsibility standards in terms of environmental protection, CRU notes. In addition, China’s aluminum industry is “overwhelmingly” coal-powered, which brings with it a higher carbon footprint.

A stewardship standard for aluminum sourcing would create a hurdle for Chinese companies to compete in overseas markets; however, Chinese companies are getting on board. Out of 14 ASI PS certified companies, five are Chinese.

China-based Nanshan Aluminium became the first ASI member in July 2018, receiving its PS certification in January 2019 and its CoC certification in March 2019. The push to complete certification was to “drive growth in exports of aseptic foil for packaging.”

Shanghai Shenhuo Aluminium Foil Co. joined ASI as a member in 2017, starting ASI’s certification process in December 2018 and becoming PS certified in February 2019. The company plans to achieve CoC certification in 2020.

One other issue at present is that traders are not ASI certified and there is no mechanism for companies using traders to work around this. If companies source any material in the aluminum value chain, directly or indirectly, from traders, they are not eligible for CoC certification, CRU says. ASI will review this at its next revision cycle starting in late 2019.

Reducing emissions  

The ASI certification comprises of criteria on greenhouse emissions for the aluminum smelting process, with a CO2 emission threshold and improvement commitment plan. As of June 11, aluminum smelters should:

  • demonstrate they have put in place the necessary management system, evaluation procedures and operation controls to limit direct GHG emissions
  • aluminum smelters in production by 2020 must demonstrate GHG emissions from the production of aluminum is below 8 tons CO2 per metric ton of aluminum by 2030
  • aluminum smelters starting production after 2020 must demonstrate GHG emissions from the production of aluminum is at a level below 8 tons CO2 per metric ton of aluminum

If the policy had immediate effect, the 8 tons of CO2 per metric ton of aluminum “would automatically eliminate more than half of world primary production from gaining ASI certification,” most of which is in China, CRU says.

Chinese fabricators willing to get ASI’s CoC certification will need to be able to supply their primary aluminum from smelters that comply with the emission threshold within the timeframe, as well as meet other criteria other than GHG emissions.  

CRU notes integrated companies “should find it easier to obtain the CoC standard because they have control of all the value chain,” from mining to semi-finished production.

Rio Tinto was the first company to get CoC certified in July 2018 after achieving the PS standard in March 2018. The certification covers parts of production, including Rio Tinto’s Gove Bauxite mine in Australia, its Vaudreuil refinery in Canada and Canadian smelter plants and ports and rails.

This has led Rio Tinto to a partnership with Nespresso, as the company aims to have CoC standard by 2020. It demonstrates the commercial value that is implied in the certification, meaning that companies will need to source certified material to get the certification, CRU says.

Norway-based Hydro has already obtained CoC certification for its rolling mills, including Germany-based Alunorf and more recently the Paragominas mine and Alunorte refinery in Brazil. The integrated companies that obtain CoC certification first will “likely enjoy the benefit of being the first ones," CRU notes. Among China’s largest integrated producers, Nanshan is the only ASI member as of June 2019.

Scrap eligibility

Any postconsumer scrap is eligible to be certified as CoC, which means preconsumer scrap is not eligible. ASI’s justification for scrap eligibility is that preconsumer scrap is already recycled to a “great extent” compared with postconsumer scrap, of which recovery and recycling “needs to be incentivised.” In addition, “if all scrap was automatically eligible, there would be less incentive to implement the certifications in primary production.”

CRU notes the eligibility creates an incentive to recycle postconsumer scrap, however; there is an “overall trend of increasing postconsumer scrap, so we believe it will not create significant changes to the market dynamics.”

Going green

The need to respond to demand from brand owners looking for a lower carbon footprint has led to the creation of “green” aluminum brands by major companies in the past few years. Russia-based Rusal launched its Allow aluminum brands in 2018 with carbon footprint certificates. Rio Tinto has created the RenewAl brand and Pittsburgh-based Alcoa has launched Sustana. In addition, Hydro has launched Hydro 4.0 with a carbon footprint certification of 4.0 kiloton of CO2 per kilogram of aluminum.

ASI also extends the concept of green aluminum beyond the carbon footprint with an initiative that is “likely to be valued in consumer goods and automotive markets,” where final consumers drive demand to know more about the metals they use, CRU says.

Looking back at past experiences in other industries, CRU concludes new initiative can create a premium or at least become a requirement for some buyers in the aluminum market. Forest Stewardship Council (FSC) certifications to wood-based products, which started in early 2000, currently certifies almost 200 million hectares of forests across 84 countries. According to a study carried out by World Wildlife Fund (WWF) in 2015, FSC- certified products have gained price premiums and resulted in greater market access to the forest enterprises.

Likewise, ASI certifications are expected to create a premium or at least become a requirement for some buyers. However, premiums can fade out in the long-term, so “the companies that lead the way in the initiative are likely to benefit the most from market access and possibly price premiums.”

This insight is an excerpt from the July 2019 CRU Aluminium Services. For additional information please contact