Welcome to the first edition of our Sustainability Spotlight in 2023.
In this issue, you will find updates on the latest developments on LMEpassport and responsible sourcing, together with this edition's Market Insight piece from Dr. Subodh Das of Phinix, LLC on the sustainability challenges of aluminium production, with a particular focus on bauxite residue.
LMEpassport
With 226 brands (of 439 LME-listed brands) now using LMEpassport, the LME has reached the fantastic milestone of over half of our brands sharing the good work that they’re doing to achieve greater sustainability.
We are also excited to have launched a new tab on the public sustainability page: the producer profile. This is a one-stop shop for all the ESG-related information uploaded by a specific producer, and can be used by the producer themselves to showcase the ESG standards, certifications and metrics that it has achieved, as well as being available for other interested parties such as investors, NGOs or consumers.
The three available tabs on LMEpassport now show users:
- Live sustainability disclosures – all sustainability data uploaded to LMEpassport which can be filtered and searched.
- The LME’s sustainability taxonomy – a comprehensive and straightforward categorisation of relevant ESG areas for the metals and mining industries. This is designed to help users to navigate the wide range of sustainability-related focus areas by grouping the standards and certifications that we have already approved for LMEpassport into the relevant ESG areas. Currently, the taxonomy in LMEpassport shows those ESG areas where the LME has approved relevant standards, but the full taxonomy is also available (PDF).
- Producer profiles – these showcase all the information pertaining to LME brands listed by a specific producer, or multiple producers if part of the same overarching group, providing an holistic view of both the activity of that producer/group, and highlighting all the ESG credentials that the producer has uploaded to LMEpassport.
To help producers to understand and use the features available on LMEpassport, we will be creating a new step-by-step video to guide users around the sustainability aspects of LMEpassport. This includes information on how to create an account and login, how to add sustainability data, and how the public facing side of the platform works. In the meantime, we’ve created a short demo video running through the key highlights of LMEpassport.
Find out more about LMEpassport
If you would like to get involved or discuss LMEpassport in more depth, please email the Sustainability Team.
Responsible sourcing
Revised policy and compliance documents now available
Following the request for feedback initiated in December 2022, the LME published the revised responsible sourcing policy and associated compliance documents at the end of February. We would like to thank everyone who contributed to the revision and encourage producers to use the updated compliance documents. A list of the key changes is below and full details are included in Notice 23/021 (PDF).
Revised LME Policy on Responsible Sourcing of LME-Listed Brands 2023 includes:
- incorporating the secondary materials sourcing attestation as Track D into the policy itself
- clarifications that the Producer will be responsible for proposing redactions to the RFA
- additional definitions around primary, secondary and input material
Revised Red Flag Assessment template includes:
- a new workbook attachment to standardise the way country-level information is submitted to the LME
- clarifying expectations on the management systems description, grievance mechanism, and CAHRA methodologies
- adjusting Extractive Industries Transparency Initiative (“EITI”) reporting requirements
- refined wording on the supplier red flag section
Revised Secondary Materials Sourcing Attestation Form includes:
- condensed introduction and questions
- standardisation of formatting across all forms
In addition to the changes above, we believe that there were points raised in the feedback process that merit further industry-wide discussion. These include potential further amendments in relation to the “supplier red flag”, encouraging uptake of the EITI among producers’ suppliers, developments in respect of due diligence in the recycling industry, and Step 5 transparency expectations. The LME will be contributing and monitoring developments on these topics in the coming months.
LME publishes RFA summary statistics
The LME is pleased to have published the first LME RFA Summary Statistics on 13 March 2023. Transparency is a key element in the LME responsible sourcing policy and public disclosure of RFA information aims to bring accountability to producers’ supply chain due diligence practices. Producers that comply through Track C (the Published RFA Track) follow a phased transparency timeline whereby the LME publishes summary statistics for the first two years. The LME has added a “Reporting” section to responsible sourcing to make reports like this easier to find.
Event report: Auditor Summit co-hosted by the LME and the OECD
The LME and the OECD co-hosted an auditor summit on 2-3 February in Paris. The purpose of the summit was to discuss common challenges organisations face when auditing against the OECD Due Diligence Guidance. Around 80 people attended the summit, representing auditing firms, industry standards, and other relevant organisations. Attendees brainstormed solutions to common auditing challenges including auditor training, audit report transparency, coordination of metal standards and their auditors, and similarities and differences between OECD Due Diligence Guidance-related audits and audits in other sectors. The workshop was followed by an auditor training session that provided case studies to help participants understand the complex nature of these audits.
We are grateful to those that attended the auditor summit and will bring some of the learnings to the OECD Forum on Responsible Mineral Supply Chains on 25-28 April 2023 to continue these conversations with additional stakeholder groups such as producers and civil society.
Recent engagement and upcoming deadlines
As the first Track A (Recognised Alignment-Assessed Track) reporting deadline fast approaches, the LME is working with standards to ensure producers understand the requirement to submit their proof points on or before 31 December 2023.
On 21 February, the LME and the Aluminium Stewardship Initiative (“ASI”) co-hosted a webinar and on 6 March, the LME joined a seminar hosted by the China Chamber of Commerce of Metals, Minerals and Chemical Importers and Exporters (“CCCMC”). The purpose of these events was to educate producers on how complying with the respective Track A standard meets the LME’s requirements and exactly what needs to be submitted to the LME on 31 December 2023. Implementation of the OECD Guidance can be time intensive, so we urge producers that are unsure of next steps to reach out to their Track A standard of choice, or to the LME, for further assistance.
The LME recently conditionally approved the Cobalt Refiner Due Diligence Standard (prepared by the Responsible Cobalt Initiative and the Responsible Minerals Initiative (RMI)), the RMI Global Responsible Sourcing Due Diligence Standard for Mineral Supply Chains All Minerals, as well as the London Bullion Market Association’s (“LBMA”) Responsible Gold Guidance version 9. To use the LBMA’s Responsible Gold Guidance for LME-listed metals, producers will need to ensure those supply chains are covered in the audit in addition to the gold and/or silver supply chains. For details on our approved partners, please visit our webpage or be in touch with the team.
Responsible sourcing deadlines approaching:
- 30 June 2023 – annual submissions due for Tracks B and C
- 31 December 2023 – standard audit reports due for Track A
- 31 December 2023 – ISO 14001 and ISO 45001 certificates due (all LME-listed brands)
- One year from original submission – annual submissions for Track D (Secondary Material Sourcing Attestation)
View the notice about the revised responsible sourcing documents (PDF)
LME RFA Summary statistics 2021 (PDF)
View LME’s approved responsible sourcing partners
If you would like to get involved or discuss responsible sourcing in more depth, please email the Responsible Sourcing team.
Market insight
The neglected areas of aluminium sustainability: mitigation of bauxite residue (red mud)*
Dr Subodh Das is a globally recognised serial entrepreneur in manufacturing/industrial/ academic/technology-based organisations, founder and manager of several aluminium research consortia involving multi-disciplinary collaborations. He has spent 45+ years in the global aluminium supply chain from “mine to market” with diversified experiences, and in the manufacturing sector for 25 years with industry majors such as Alcoa and Logan Aluminium, a JV owned by Novelis and Tri-Arrows. He has academic expertise spanning eight years at the University of Kentucky, Lexington, Kentucky, USA. He is the founder of Secat, Inc.
Dr Das is currently managing Phinix, LLC, a high-impact entrepreneurial company serving global primary, fabrication, and scrap-based secondary aluminium and light metals industries, founded by him in 2008.
Sustainability challenges across the value chain
The three-stage production chain of aluminium from ore to casting is complex and consumes huge amounts of energy and input materials. The process requires 13,000 to 18,000 kWh/t of electric energy under the best- and worst-case scenarios, and an average of 12 kgs of CO2eq is emitted per kg of aluminium smelting worldwide. This process also results in undesirable by-products, including bauxite tailings, bauxite residue, dross, spent pot lining, etc. Here is an illustration of the range of sustainability challenges aluminium faces across the value chain:
(Published in Light Metal Age, The Quest for Low Carbon Aluminum: Developing a Sustainability Index, 2021)
(Note: PFC: perfluorinated carbon compounds, POC: products of combustion)
Since electricity generation, consumption, and GHG emission remain the key interrelated challenges in this energy-intensive industry, the concept of sustainable aluminium has so far been zoomed into CO2eq emissions and the fuel that is used to generate electricity. This article throws light on a neglected area of sustainability – bauxite residue management – which can pose serious environmental and health hazards and have a detrimental impact on aluminium’s sustainability roadmap.
Bauxite residue needs immediate attention
Bauxite residue is a waste product produced during the extraction of alumina from bauxite through the Bayer process. Rich in iron and aluminium components, the composition of bauxite residue depends on the source and the extraction process.
Bauxite residue generation can vary from 0.3 to 2.5 tons per ton of alumina produced, depending on the quality of bauxite and extraction conditions, though typically, it lies between 1 and 1.5 tons. Before disposal, bauxite residue is washed to extract as much caustic soda and dissolved alumina as possible. After washing, the residue is disposed of in special facilities known as Bauxite Residue Disposal Areas (“BRDA”) or Residue Storage Areas (“RSA”). The usual practice allows storing bauxite residue in slurry form, but some alumina producers also practice dry disposal.
The stockpile and the risk
As per an estimate from the International Aluminium Institute (“IAI”), globally, the aluminium industry generated 159 million tons of bauxite residue in 2017, and there exists a global inventory of more than 3 billion tons. Metallurgical alumina production is forecasted to increase from 140 million tons in 2022 to 178 million tons by 2040. With the growing production of alumina, bauxite residue generation is likely to increase significantly. According to the IAI’s dynamic material flow model, bauxite residue production is likely to touch about 220 million tons per year and reach an inventory of seven to eight billion tons by 2050.
High alkalinity and high caustic content in bauxite residue cause environmental risk for fertile soil and groundwater contamination. The caustic soda or sodium hydroxide (“NaOH”) content in bauxite residue leads to human health risks. Moreover, disposal of bauxite residue requires a large area, which means loss of huge land and soil, which could otherwise be used for green cover or other vegetation. There have been instances in the past when the bauxite residue slurry was released into the surrounding environment and residential areas due to leakage in the red mud ponds causing loss and injury of life along with damaging soil and water bodies.
Bauxite residue management: industry practice
From this stockpile of bauxite residue that is generated every year, only about 2.5 to 5 million tonnes get recycled every year. About 3 million tonnes are utilised every year in the production of Portland Clinker Cement, according to IAI data. This is by far the most widely known use of bauxite residue globally.
Other than that, bauxite residues are also used for:
- brick production
- soil improvement
- landfill covering
- iron production
These are just experimental uses so far and the valorised volume is much lesser than the generated stockpile. The industry has not yet been able to find an environmentally and commercially viable solution for bauxite residue valorisation.
Case studies of bauxite residue valorisation
India’s Hindalco, part of the Aditya Birla Group, was the world’s first company to undertake a 100% red mud utilisation strategy in 2020. The company signed an agreement with UltraTech Cement, India’s largest cement manufacturer, to deliver 1.2 million tons of bauxite residue per year to be used as input materials.
UAE’s Emirates Global Aluminium (“EGA”) has begun constructing a pilot plant to convert bauxite residue into soil products that can be used to expand green cover and other purposes in the UAE.
Further, Hydro Alunorte recently signed a contract with Wave Aluminium to build a plant in Brazil to process bauxite residue, aiming to recover commercially valuable materials. The planned processing plant aims to process 50,000 tonnes of bauxite residue per year. The technology has been tried and tested on a laboratory scale.
Barriers to managing bauxite residue
One of the biggest bottlenecks in valorising bauxite residue within a market economy is economic viability. There is no dearth of technological options to manage bauxite residue. However, there is a much higher likelihood of any given utilisation pathway being pursued if it is economically viable along with being environmentally beneficial. Hence, the initiatives need policymakers’ support or monetary incentive.
Within aluminium, producers are already exploring a premium pricing structure for low-carbon aluminium, primarily based on electricity sourced from hydropower. Very few aluminium producers get access to hydropower and no new hydro dams are under construction for environmental reasons. The hydro-based premium does not apply to most global aluminium production. Hence, producers enjoying the benefits of a low-carbon aluminium premium already have the advantage of cheaper hydropower. Further, this is creating a barrier between traditionally known “green” and “black” aluminium, driving coal-powered aluminium producers toward the sustainability roadmap.
This raises the question of whether there should be premiums for other aspects considered sustainable within the aluminium market. Having a premium could incentivise the effective utilisation of newly produced and existing bauxite residue. A producer could claim a higher premium for the removal of problematic existing bauxite residue compared to a newly produced lot. The bauxite residue mitigation premiums could apply equitably to all primary aluminium producers using any fuel source. A premium based on higher bauxite residue utilisation would encourage producers to churn out primary aluminium adhering to low-bauxite residue requirements. It could act as a workable solution to deal with the necessary problem in the aluminium industry, needing an urgent and disruptive approach.
*The content covered within this article articulates the observations of Dr Subodh Das and is not reflective of the LME viewpoint*
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