By Marghanita Johnson, Chief Executive Officer, Australian Aluminium Council

The Australian aluminium industry stands at a critical juncture, balancing its longstanding economic contributions with the urgent demands of decarbonisation and global competitiveness. 

As a cornerstone of the national economy since 1955, the aluminium sector faces mounting challenges from shifting energy policies, evolving market dynamics, and the global transition to sustainable manufacturing. Yet, with strategic investment and innovation, Australia’s aluminium industry has the potential to cement its position as a leader with both strategic and economic significance. 

Australia’s aluminium value chain spans six bauxite mines, five alumina refineries, four aluminium smelters, and over 20 extrusion presses. Australia is one of the world’s largest bauxite producers, generating over 100 million tonnes annually, while also ranking as the top global exporter of alumina and the seventh-largest aluminium producer. This mine-to-market model supports over 20,000 direct jobs and an additional 55,000 indirect roles, primarily in regional areas.

Beyond its economic footprint – contributing more than $18 billion annually, including $15 billion in export revenue – the industry plays a pivotal role in everyday life and national security. Aluminium is fundamental to all aspects of the modern world – from window frames in homes, to food packaging, smartphones, and vehicles. It is also essential for defence applications, such as military aircraft, armoured vehicles, and naval vessels, underscoring the need to retain a strong domestic supply of the metal, from mine to market.

What many Australians may not realise is that aluminium also plays a critical role in renewable energy technologies, including solar panels, electric vehicles, and batteries. With global demand for aluminium projected to double by 2050 – largely driven by the energy transition – Australia must act decisively to capitalise on its reserves of bauxite, alumina refining capacity, and aluminium smelting potential.

Recognising the aluminium industry’s role in the low-carbon transition, the Australian Government recently acknowledged the need to support Australia’s smelters in their transition to renewable electricity. This $2-billion Green Aluminium Production Credit helps align Australia with global industry policies such as the US Inflation Reduction Act and the European Critical Raw Materials Act. Under this policy, smelters that achieve significant emissions reductions before 2036 will be eligible for emissions-linked credit contracts, payable per tonne of green aluminium produced for up to 10 years. A 2030 review will assess the credit’s impact and market effectiveness. This initiative is a globally significant step towards securing Australia’s aluminium industry’s future while reinforcing the country’s leadership in the energy transition.

The industry has long called for production credits to attract private capital and ensure global competitiveness. These credits will provide transitional support as Australia builds the necessary energy infrastructure and stabilises electricity pricing, which is critical for long-term sustainability.

Energy security: the key to sustainable aluminium production

A stable, affordable energy supply is fundamental to aluminium production, with smelting alone accounting for about 10 per cent of Australia’s National Electricity Market demand – rising to more than 25 per cent on low-demand days. The industry is a key player in grid stability, providing essential load flexibility.

Several major energy agreements were announced in 2024, including the following:

• Alcoa secured a nine-year electricity contract extension with AGL, ensuring Portland Aluminium Smelter’s operation until mid 2035 at 95 per cent capacity.
• Rio Tinto signed two power purchase agreements to supply renewable energy to its Gladstone operations, including Boyne Smelter. The agreements, totalling 2.2 gigawatts from wind and solar projects, could reduce carbon emissions by five million tonnes per annum and contribute 10 per cent of Queensland’s power demand.
• Tomago Aluminium updated stakeholders on its ambitious goal to fully transition to renewable energy by 2028.

Aligning energy policies with net zero ambitions will be critical in maintaining Australia’s competitive edge in aluminium production while supporting regional economies.

Critical minerals recognition

One of the industry’s key advocacy efforts is securing bauxite, alumina and aluminium as designated critical minerals under Australian policy. While high-purity alumina is already listed, its broader counterparts remain absent despite being included in several other nations’ critical minerals strategies.

These materials are vital to renewable energy technologies, electric vehicles, and sustainable infrastructure. Designation as critical minerals would attract investment, streamline regulatory approvals, and ensure long-term supply chain security – bolstering Australia’s role as a leading supplier of sustainable raw materials.

Decarbonisation: a pathway to global leadership

Decarbonisation is central to the industry’s future, with technological advancements offering significant emissions reductions. Australia’s alumina production, responsible for 45 per cent of the industry’s emissions, is at the forefront of global low-emission technology trials. Key initiatives include mechanical vapour recompression for alumina digestion, and electric and hydrogen calcination processes to reduce reliance on fossil fuels.

By leveraging abundant renewable energy resources, Australia can produce low-carbon alumina and aluminium, reducing global carbon dioxide emissions while maintaining its position as a preferred supplier in increasingly sustainability-conscious markets.

Securing a Sustainable Future

The Australian aluminium industry is at a crossroads. While facing significant challenges, it also holds immense opportunities to lead in low-carbon, high‑value manufacturing. Recent developments – ranging from production credits and renewable energy investments, to critical minerals advocacy and industry unification – underscore its resilience and adaptability.

By embracing innovation, policy alignment, and strategic investment, Australia can ensure its aluminium industry remains a global leader in sustainable resource development, securing both economic prosperity and environmental responsibility in an increasingly decarbonised world. The industry has had a long history of innovation and resilience since it began domestic production in 1955 – and with the right industry and energy policy framework, the aluminium sector can continue to play a pivotal role in Australia’s economy and industrial landscape for generations to come.