Australia’s aluminium industry is calling for targeted policy reform to unlock what it describes as a significant clean manufacturing opportunity, following the release of a new report commissioned by the Australian Aluminium Council.
The report, prepared by L.E.K. Consulting and released on Wednesday, found that while aluminium recycling offers one of the most effective pathways to lower-emissions manufacturing, a range of economic, technical and policy barriers are limiting investment in domestic recycling and remelting capacity.
According to the Council, the aluminium industry has operated in Australia since 1955 and remains a major contributor to the national economy.
The sector includes six bauxite mines producing more than 100 million tonnes annually, five alumina refineries producing around 17 million tonnes per year, and four aluminium smelters, alongside more than 20 extrusion presses and other downstream processing operations.
Aluminium is Australia’s highest earning manufacturing export, generating more than AUD 15 billion in annual export revenue and contributing over AUD 18 billion to the economy. The industry directly employs more than 20,000 people and indirectly supports a further 55,000 families, predominantly in regional areas.
The new report states that recycling aluminium requires about five per cent of the energy used in primary production and is increasingly sought by manufacturers, builders and brand owners looking for verified low-carbon materials. However, it concludes that first-generation remelting projects are not commercially viable under current market conditions.
“The challenge is not a lack of demand or ambition – it’s that the economics simply don’t quite stack up today,” said Marghanita Johnson, chief executive of the Australian Aluminium Council.
“High energy costs, tight scrap margins, technical complexity and fragmented policy settings are all acting as barriers to investment.”
The report notes that Australian producers have expanded closed-loop recycling systems for pre-consumer scrap, demonstrating technical capability and industry stewardship. However, it says these systems are nearing their practical limits without further investment in remelting facilities, technology and infrastructure.
It also highlights cost pressures facing potential remelters. Aluminium scrap prices in Australia typically exceed 90 per cent of the London Metal Exchange benchmark, leaving limited margin once energy, transport and processing costs are accounted for.
Additional constraints include mixed-alloy scrap streams, limited pre-treatment infrastructure and transport challenges, with collection beyond 500 kilometres described as uneconomic without support.
The Council said existing government programs are not structured to support aluminium remelting projects, despite their emissions reduction potential.
“Aluminium recycling sits in a policy gap – it’s too industrial for waste programs and too early-stage for purely commercial finance,” Johnson said. “Without coordinated support, these projects will not proceed, even though the long-term benefits are clear.”
Drawing on examples from Europe, North America and Asia, the report states that successful recycling industries have relied on direct government co-investment, particularly for first-of-a-kind remelt plants, technology upgrades and enabling infrastructure.
It identifies three priority actions: preserving the competitiveness of existing aluminium smelters; mobilising capital for first-generation remelt facilities through blended finance, including grants and concessional debt; and building market confidence through recycled-content standards, procurement signals, improved scrap transparency and targeted logistics support.
“This is not about mandating outcomes before the foundations are in place,” Johnson said. “It’s about creating the conditions where industry can invest, scale and compete in a lower-carbon global market.”
