En+ Group urges London Metal Exchange to go further with sustainability proposals

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september, 2020

World’s largest producer of low-carbon aluminium welcomes move towards carbon transparency but warns existing proposals do not go far enough

23 September 2020 – En+ Group, the world’s leading producer of low carbon aluminium and largest private sector generator of hydropower, has urged the London Metal Exchange (LME) to show greater green ambition with its sustainability proposals.

In its formal response to a consultation paper issued last month by the LME, En+ has set out three core recommendations and called on the exchange to take a more active role in guiding the aluminium market towards a low-carbon future.

  1. En+ has called for mandatory carbon content and sustainability-related disclosure by metal producers (not voluntary) and this should be fully integrated with the existing trading system. This would mean that LME Passports, which are attached to warrants traded on the exchange, should include mandatory information about each aluminium product’s carbon footprint, whether it is ASI certified and the source of energy used to produce it. 
  2. En+ also warned that the LME’s plans for a separate spot trading platform for low-carbon aluminium would not be effective in supporting a low-carbon transition. The platform proposed by the LME would not impact normal trading routes for the metal and is therefore unlikely to gain the widespread traction needed to spur a low-carbon transition. 
  3. En+ called for the creation of a separate low-carbon aluminium futures contract. The establishment of a futures market - the vast majority of the trades on LME – in low carbon aluminium would transform the way purchasers and producers of low-carbon aluminium are able to manage price risks. Moreover, it would ensure sustainability is truly integrated into the marketplace for LME-listed aluminium. 

Lord Barker of Battle, Executive Chairman of En+ Group, said:

“This LME consultation is an important step forward but the current proposals do not go far enough. Transparency is not a ‘nice to have’. Carbon emissions disclosure should be mandatory. The aluminium sector has a real opportunity to lead the low carbon economy but to do so it needs to step up the pace of change.

We also need to recognise that the vast majority of trades on the LME – around 98% – are in futures rather than spot trades so we are calling for a low-carbon aluminium futures contract so that aluminium producers and buyers can better manage their price risks.”

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