(CN) — Wherever you are, wherever you go, take a look around your immediate vicinity. Aluminum is there – whether it’s in the lamp on your desk, the phone in your hand, a single use beverage can or reusable bottle nearby, the skin of an automobile, aircraft or boat you may be traveling in, the major components of your laptop or desktop computer.
Aluminum is omnipresent. Yet as recently as 2018, the aluminum market was saturated. America’s domestic output of aluminum plunged while cheap imports flooded the market. At the time, the U.S. Department of Commerce conducted an investigation under Section 232 of the Trade Expansion Act and the resulting report concluded the global market for aluminum posed a threat not just to domestic production, but also to national security.
Six of 11 primary aluminum smelters in the country ceased operations between 2012 and 2017, while the nation imported an average of five times as much finished aluminum as it produced. In 2016, imported aluminum represented 64% of all domestic consumption, leading to a trade deficit of $7.2 billion.
The Commerce Department report primarily pointed the finger at China, which was producing so much aluminum that it had more reserves than the United States produced in a year. Meanwhile, the U.S. completely lacked any strategic reserves of aluminum or its derivatives and only two remaining smelters were capable of producing primary quality aluminum of a suitable quality for the defense, aerospace and tech industries.
As a result of the investigation and with bipartisan support, former President Donald Trump initially imposed a 10% tariff on aluminum imports from countries other than Canada and Mexico in early 2018. After additional measures were taken against Chinese aluminum in particular, primary aluminum production in the U.S. increased 37.6% by 2020, breathing new life into the industry, according to a 2021 study by the Economic Policy Institute.
Within the same two years, American aluminum manufacturers announced $6 billion in new capital investments and along with it, about 5,500 new jobs. Demand dipped during the Covid-19 pandemic but in May 2022, American manufacturer Novelis announced “the first fully integrated aluminum mill built in the United States in 40 years.”
At a cost of $2.5 billion, the Atlanta-based company will build a low-carbon flat rolling mill and recycling facility on a 3,000-acre greenfield site in Bay Minette, Alabama, creating about 1,000 new jobs with an average salary of $65,000, or roughly 25% more than the state’s median annual household income.
Remarkably, just a few months later, a strikingly similar investment was announced in Columbus, Mississippi, just 250 miles away. There, Steel Dynamics is building its own $2.5 billion recycled aluminum flat-rolled mill, expected to provide 700 jobs with an average salary of $93,000, or nearly twice the median household income in Mississippi.
According to the Aluminum Association, both new mills will produce products for canning and packaging. Novelis has indicated it will have flexibility for automotive products, while Steel Dynamics has indicated they will serve the automotive and common alloy industrial sectors. Both have plans to use a significant amount of pre- and post-consumer aluminum scrap in the production process.
And both states are throwing economic incentives at the developments. More than $500 million in public contributions have been awarded to the projects, broadly supporting incentives including tax breaks, rebates, workforce development and infrastructure improvements.
But according to parties who negotiated the developments and others with knowledge of the international aluminum market, the new mills in Alabama and Mississippi were not just the result of recent trade policy, but also sustainability initiatives and carbon emission goals.
Meanwhile, primary aluminum smelting in the nation has yet to rebound. Last summer, Century Aluminum announced it was mothballing its facility in Hawesville, Kentucky, due to “skyrocketing energy costs.” The facility was the largest producer of military-grade aluminum on the continent and with its closure, just one other smelter with similar capabilities remains in operation.