EU plans to restrict aluminium scrap exports

The EU has announced plans to restrict exports of aluminium scrap to protect its industry, risking a fresh trade dispute with the US.

European trade commissioner Maroš Šefčovič said on Tuesday that the growing leakage of scrap from Europe risks its sustainability goals. Aluminium producers say their recycling plants are idle as valuable scrap is sold to the US and Asia for higher prices.

“We do not want to completely block aluminium scrap exports,” Šefčovič said in a speech in Brussels.

“Rather, we want to prepare a balanced measure that will allow industries using aluminium to access adequate quantities of this strategically important material at competitive prices, in order to pursue their path towards decarbonisation, fully in line with a circular economy logic.”

US importers are likely to press their government to resist any change. Washington has imposed 50 per cent tariffs on imports of steel and aluminium, but not on scrap.

As a result, US smelters have increased purchases of European scrap to produce fresh metal and avoid tariffs.

US trade representative Jamieson Greer and commerce secretary Howard Lutnick will meet Šefčovič in Brussels on November 23 and 24 to discuss progress on the two sides’ shaky trade deal. The agreement, struck in July, imposed levies of 15 per cent on most European exports.

But levies of 50 per cent remain on steel and aluminium and Sefcovic has been pressing Washington to lower them.

Šefčovič said that recycling aluminium from scrap emitted far less carbon than smelting new metal. The material is vital for the green transition as it reduces the weight and fuel consumption of vehicles and is used in many renewable energy technologies.

European Aluminium, which represents the industry, said an estimated 15 per cent of EU recycling furnace capacity was offline because of insufficient domestic scrap availability.

The EU industry has invested heavily in recycling but has about 2mn fewer tonnes of scrap annually than it can process.

“This is a strong and timely statement of intent from the commission,” said Paul Voss, director-general at European Aluminium. “Europe’s future will, to a large extent, depend on its ability to secure access to the raw materials that our economy and our society require. It is therefore hugely encouraging to see the EU acting so decisively to save our scrap.”

The sector has an annual turnover of €40bn, directly employs 250,000 people and supports a further 1mn jobs in Europe.

The final measures will come early next year and have yet to be decided. Options include a levy on exports or targets for recycled content, according to people familiar with the matter.

Europe’s scrap metal dealers, who can get higher prices overseas, have long lobbied against any restrictions.

The EU also moved on Tuesday to protect its ferroalloy industry from global “overcapacity” by imposing safeguards on some types of imports.

Ferroalloys improve the strength of steel and its resistance to corrosion. They are used in the construction, automotive, aerospace and defence industries.

Each exporting country will receive a tariff-rate quota per type of ferroalloy. Imports exceeding those quota volumes can only enter the bloc duty free if their price exceeds a set threshold. The measure will last for three years.