The London Metal Exchange announced late last week its plans to establishing a trading platform that will offer low-carbon aluminium warrants to traders seeking a source of primary aluminium derived principally from hydroelectricity or other renewable resources.
“Our plans include…working with the market to investigate a standalone spot trading platform for the exchange of aluminium warrants, enabling downstream users to procure metal with their required characteristics, such as low carbon,” the LME explained to Reuters on Friday.
LME executives have been considering such an offering since last year, hoping to position itself to take advantage in the rise in demand for an alternative to primary aluminium produced via coal-burning power or other environmentally-damaging methods.
A spokeswoman told S&P Platts last week that the low-carbon aluminium trading platform may only be months away.
“We will be working with the market on the launch timeline but we would estimate that the platform could be ready for go-live as soon as the end of next year, possibly sooner,” the unidentified spokeswoman explained.
The spokeswoman continued by indicating that only aluminium that meets certain standards, including those regarding the amount of carbon dioxide produced while smelting it, will be offered on the platform.
“We are actively engaging with our stakeholders on environmental sustainability issues – particularly in the aluminium sector, and are committed to supporting initiatives that facilitate the global transition to a low-carbon economy,” she explained.
Though some of the details have been settled, many more remain to be determined before the platform is ready for prime time.
“We are still working with the market to figure out the details and will have more information to share over the coming months,” she noted.
Experts expect the metal traded on the platform will have a price premium due to the higher standards the metal sold on it will be required to meet.