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Demand for secondary aluminum is growing faster than primary metal

Chief Financial Officer William Oplinger stated on December 1 that Alcoa's development of its ASTRAEA metal scrap purification process will allow the primary aluminum producer to consider increasing its stake in the growing secondary aluminum market.

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“The demand for primary [aluminum] will continue to grow in the next ten years, but given the fact that aluminum can be recycled indefinitely, the supply of secondary [aluminum] will continue to grow, and the demand for secondary [aluminum] will actually be more expensive than in the next ten years. Demand for primary products in 2016," Olinger said in a speech at the Citi Basic Materials Conference.

"This means to us that we have spent a lot of time studying Alcoa's performance in the secondary market."

Oplinger stated that Alcoa already uses some high-value post-industrial aluminum scrap at certain smelting and foundry locations in its global operations. However, he added that ASTRAEA technology may increase the company's participation in the post-consumer scrap market.

Post-consumer aluminum scrap, such as zorba auto shred, usually represents low-grade materials with high impurity content and can only be used for certain applications. If successfully developed, ASTRAEA will be the first process that can sort and purify post-consumer waste into high-purity aluminum products.

"We are working with some of the best sorting companies in the world to be able to sort out the waste and then put it into the ASTRAEA process," Olinger said. "ASTRAEA is still a research and development project that needs to be scaled up over time and prove its economics, but this will be Alcoa's ability to succeed in the recycled scrap market."

Pittsburgh-based Alcoa previously stated that ASTRAEA may be able to produce P0101 grade aluminum, which has a higher purity than typical P1020 commercial grade primary aluminum.

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