Aluminium trader Trafigura Group has established a ‘low carbon aluminium’ financing platform.
Natixis and Rabobank have supported Trafigura in the design and structuring of this low carbon aluminium’ financing platform.
As the first financing of its kind for Trafigura and for the wider market, the facility has been designed to meet growing demand from downstream manufacturers for low carbon aluminium and to support upstream producers in accelerating their transition to low carbon technologies. The platform will enable Trafigura to access financing at a preferential interest rate and, in turn, to pay a premium to low carbon aluminium producers. It follows Trafigura’s establishment of a low carbon aluminium trading desk in 2019, the first commodity trader to do so.
Platform with clear parameters for low carbon aluminium production
Aluminium is expected to be a major enabling material for the transition to a low carbon economy due to its low weight, high recyclability and wide range of applications across diverse industries including transport, packaging and consumer goods, and building and construction. Numerous regulatory and voluntary initiatives have sought to improve the emissions and energy intensity of the aluminium production sector, but there is still no official market definition of ‘low carbon aluminium’. Through this new financing, and in coordination with Natixis and Rabobank, Trafigura prides itself on having developed a methodology that sets out clear parameters for low carbon aluminium production, drawing on existing recommendations and standards such as those formulated by the EU Technical Expert Group on Sustainable Finance and the Aluminium Stewardship Initiative (ASI).
Increased demand for low carbon aluminium
“The metals industry has an important role to play in the fight against climate change. Trafigura is committed to facilitate the transition towards a sustainable aluminium supply chain,” said Philippe Müller, head of Aluminium and Alumina Trading for Trafigura. “For aluminium, our objectives are to secure long-term low carbon aluminium supply for our customers, to support the efforts of our business partners as they invest in decarbonisation and ultimately to create efficient linkages between suppliers and end-users. We’re already seeing increased demand for low carbon aluminium particularly from the European automotive industry and the packaging industry worldwide,” he concluded.