A new report by L.E.K. Consulting for the Australian Aluminium Council released today has found that while aluminium recycling offers one of the most effective pathways to lower-emissions manufacturing, significant economic, technical and policy barriers are preventing investment in domestic recycling and remelting capability in Australia.
The report, Enabling Development of Aluminium Recycling Capability in Australia, finds that recycling aluminium requires only around five per cent of the energy used in primary production and is increasingly demanded by manufacturers, builders and brand owners seeking verified low-carbon materials. However, first-generation remelting projects remain commercially unviable under current conditions.
Australia’s current aluminium producers have trialled and progressively expanded closed-loop recycling systems for pre-consumer scrap, demonstrating strong stewardship and technical capability. However, these systems are reaching their practical limits without significant new investment in remelting capacity, technology and supporting infrastructure.
According to the report, aluminium scrap prices in Australia typically sit at more than 90 per cent of the London Metal Exchange benchmark, leaving limited margin for domestic remelters once energy, transport and processing costs are included. These pressures are compounded by mixed-alloy scrap streams, limited pre-treatment infrastructure and Australia’s geography, which makes collection beyond 500 kilometres uneconomic without support.
Existing government programs are not designed to support aluminium remelting, despite its strong decarbonisation credentials. Drawing on international experience from Europe, North America and Asia, the report finds that successful recycling industries are built through direct government co-investment, particularly for first-of-a-kind remelt plants, technology upgrades and enabling infrastructure.
Three priority actions are required to overcome current barriers:
- Preserving the competitiveness of existing aluminium smelters, which underpin skills, capability and future recycling potential;
- Mobilising capital for first-generation remelt facilities through blended finance, including grants, concessional debt and investment incentives; and
- Building market confidence and feedstock certainty through recycled-content standards, procurement signals, improved scrap transparency and targeted logistics support.
Read the report – Enabling Development of Aluminium Recycling Capability in Australia
Read the media release – Targeted policy reform needed to unlock clean manufacturing opportunity
