CRU Case Study: Aluminium smelters stung by the escalating costs of carbon products

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Carbon products, namely coal tar pitch and calcined petroleum coke, are ancillary inputs into the production process of primary aluminium, and they constitute the main raw materials in the production of anodes. Primary aluminium smelting, or the conversion of alumina into molten aluminium, undergoes an electrolysis process which requires the use of anodes. An aluminium smelter either produces those anodes onsite within a captive carbon plant or purchases them from third party suppliers. Anodes are replaced periodically, typically once a month, although that depends on the size of anode and the quality of carbon products. Therefore, a continuous supply of carbon products is needed to produce primary aluminium. Many smelters do not have a carbon plant on site and generally endure high carbon costs compared to smelters that produce their own anodes, as anodes must be purchased from a third party. For smelters selling excess anodes, the revenue gained would offset its carbon production cost.

Green petroleum coke is sourced from oil refineries and is derived from the residue of the refining and forms a small proportion of its output. When calcined, it is used in the manufacture of both carbon anodes and cathodes. On the other hand, coal tar pitch is a residuum from the distillation of coal tar, which is a by-product of the carbonisation of coal into metallurgical and foundry coke.

The past two years witnessed a substantial rise in carbon costs for smelters worldwide, buoyed by rising prices of purchased coke and pitch. This has pushed the cost component of carbon products for some smelters from a tenth to a fifth of its site cost. With coke and pitch prices rising to historical highs, this has meant the pinch was being felt by aluminium smelters worldwide. For a typical smelter’s cost profile, carbon costs are typically the third largest component of the cost profile, behind power processing and alumina purchasing costs. For some smelters, carbon products are now the second largest. Calcined petroleum coke prices are the main drivers as pitch represents around 15–20% of the carbon material needed. Their respective use rates average around 0.35 t and 0.08 t per tonne of aluminium produced.