En+ calls on LME to introduce emissions disclosure rules

En+, the hydropower and metals group formerly controlled by Russian oligarch Oleg Deripaska, has called on the London Metal Exchange to join the fight against global warming by introducing new disclosure rules on emissions.

Greg Barker, the group’s executive chairman, said the world’s largest market for industrial metals should force aluminium producers that use the exchange to reveal the carbon footprint of their metal.

“As a first step to meaningful carbon reduction, every company needs to be far more transparent in disclosing the carbon content of the aluminium it produces,” Lord Barker, a former UK energy and climate change minister, wrote in the Financial Times on the eve of the UN Climate Summit in New York.

Aluminium has been identified by the UN as one of the seven “hard to abate sectors” where moves to reduce emissions is crucial.

The call from the world’s biggest aluminium producer outside of China adds to the pressure the 142-year-old exchange is facing to ensure that the metals traded on it, including zinc and copper, are responsibly sourced.

The LME earlier this year announced rules requiring all metals on the exchange to be responsibly sourced from 2022. Although they target the likes of child labour, they carry less onerous environmental standards that have been criticised by campaign groups including Amnesty International.

Lord Barker has been touting the environmental credentials of En+ since the company, which controls Rusal, was freed from crippling US sanctions at the start of the year after Mr Deripaska relinquished control of the company.

It signed a deal in April to supply the largest new aluminium plant built in the US in nearly four decades with low-carbon aluminium. The company is also working on new smelter technology that it says will create a completely emissions-free version of the metal. It has also put its coal-fired power stations in Russia up for sale.

While producing aluminium is energy-intensive given the vast amounts of power required to transform its key raw material, alumina, into finished metal, Rusal claims its products are low carbon because most of its smelters are hydro powered.

LME said it had been engaging with industry participants over the question of environmental standards on its metals. The exchange recently set up a working group to examine the issue, including low-carbon aluminium and the need for greater transparency.

The LME said: “While we recognise there is not yet a global consensus on environmental sustainability in the aluminium sector, we are engaging with industry participants in bringing together existing initiatives and are committed to providing the necessary support to drive this crucial issue forward.”

The push by En+ for carbon disclosure was criticised by rival producers, who said the Russian company was simply trying to carve out a special niche for its metal so it could charge a premium tied to its environmental credentials.

“The sustainability debate is much wider than just carbon emissions,” said one of the producers. “It has to take into account human rights and water usage.”

The move by En+ underlines how metal and mining companies are facing increasing pressure to prove they can play in a shift to a low-carbon economy. Rusal says aluminium will be a key building block of the low-carbon economy, used in electric vehicles and sustainable packaging.

If the LME forces greater transparency, it will be a “vital first step in the creation of a new asset class here in London — low-carbon aluminium”, said Lord Barker.

Simon Webber, lead portfolio manager at Schroders, said a shift to lower carbon metal would only be helped by greater transparency. “The emission profile of aluminium production is huge and very disparate. It can be produced with four or five tonnes of C02 or 20 — and more than half the industry does it with 20. We should know that,” he said.

Alf Barrios, chief executive of Rio Tinto’s aluminium division, which launched its own low-carbon aluminium brand in 2016, said: “We have helped to pioneer responsible production standards through the Aluminium Stewardship Initiative that cover not only carbon emissions but a broad range of sustainability measures along the value chain.”

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