$6-billion carbon tax shield: Rio Tinto, AM Green plan world's largest green aluminium plant in India

The two companies have signed a memorandum of understanding (MoU) to jointly assess the feasibility of developing an integrated low-carbon aluminium project powered by renewable energy in India, a joint statement said. 

This development assumes significance in the backdrop of several developed economies planning to impose carbon tax on imports, including the European Union's Carbon Border Adjustment Mechanism (CBAM), bringing in stringent norms.

The plan includes building a 1 million tonne per annum (mtpa) aluminium smelter and a 2 mtpa alumina refinery.

"Together, the parties will consider the potential development of up to a 1 million tonnes per annum (mtpa) primary aluminium smelter and 2 mtpa of alumina production, both powered by renewable wind and solar energy firmed by pumped hydro storage," the statement said.

"The development will comprise a study to evaluate a potential first phase 500,000 tonnes per annum primary aluminium smelter in a favourable location in India," it added.

The aluminium smelter will run entirely on 1.8 gigawatts (GW) of round-the-clock renewable power, said one of the two people mentioned above.

“While an investment of around $4 billion will be required for setting up the aluminium smelter, the alumina facility will require around $2 billion," the person added.

Rio Tinto did not confirm the financial details of the potential project. AM Green also did not respond to a mailed query regarding the projected investment.

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Strategic partnership

Rio Tinto Aluminium Chief Executive Jérôme Pécresse said in the statement that the study is an important step in growing the company's global, low-carbon aluminium footprint while exploring new project delivery approaches and opportunities in emerging markets.

"Partnering with AMG Metals & Materials enables us to assess how we can develop low-cost responsible aluminium production powered by renewable energy. With its rapid economic growth and strategic position, India is a compelling location for this potential project and aligns with our long-term vision for a globally more diverse and resilient aluminium business," he said.

As part of the study, AMG M&M, promoted by the founders of Greenko and AM Green, will examine a firmed renewable energy solution with Greenko, while Rio Tinto will explore a commercial alumina solution. The study will also assess smelting technology options to determine the most cost-effective solution for the project.

Group president of AMG M&M and Greenko Mahesh Kolli said, “Over the last few years, we have been able to deliver a multitude of decarbonization solutions comprising electricity, molecules, chemicals and fuels. We are excited to expand that further to the materials space. This MoU could deliver much needed low-carbon metal at scale to propel decarbonization initiatives in global supply chains across auto, construction, consumer packaging and many more segments."

India’s energy transition playbook has been attracting global investors. With operations in 35 countries, Rio Tinto is a global mining and metals major. Its primary products include iron ore, aluminium, copper, lithium among other minerals. AMG Metals & Materials is a subsidiary of AM Green set up by the founders of Greenko Group Anil Chalamalasetty and Mahesh Kolli.

India’s green metal map

India is world's second largest producer of aluminium after China; and exports the commodity and derived products to the US and European Union. The current market size of aluminium in India is around 5 million tonne per annum. Companies in steel and aluminium businesses are looking at ways to decarbonize their operations and remain competitive globally.

AM Green is setting up production facilities for green molecules, including green hydrogen, green ammonia, biofuels, e-methanol, sustainable aviation fuels, and various downstream high-value chemicals, for decarbonization in hard-to-abate industries.

In September last year, AM Green Ammonia B.V., another AM Green company tied up with Germany’s RWE Supply & Trading to supply green ammonia. Also, in January this year, AM Green partnered with global logistics giant DP World to set up advanced logistics and storage infrastructure for green hydrogen and green ammonia exports.

Mint earlier reported about Malaysia’s Gentari Sdn Bhd and Singapore’s GIC Holdings Pte Ltd plans to invest $1.75 billion in AM Green Ammonia Holdings, that ranked among the world’s largest energy-transition deals.

While Gentari, will invest $1.5 billion for 30% in AM Green Ammonia Holdings, the founders will hold the balance 70% along with Singaporean wealth fund GIC, which will invest $250 million.

A comparatively sustainable metal—aluminium—is used in several sectors ranging from power, packaging to construction. According to recent estimates by JMK Research, by 2030 the Indian aluminium sector is expected to integrate around 18-20 GW of solar and wind capacity. India aims to achieve 500 GW of non-fossil power generation capacity by 2030.

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