The Front Lines of Sumitomo Corporation's Aluminium Business: Supporting the Future, Light as a Feather

What are the key characteristics of aluminium?

Aluminium is lightweight, highly corrosion-resistant and malleable, making it suitable for a wide range of products. Its lightness is particularly valued for improving fuel efficiency and reducing CO2 emissions, which directly contribute to diminishing environmental impact. Many industries place great value on this property. In recent years, the substitution of other metals for aluminium has accelerated, especially in the automotive industry. As the functionality of vehicles continues to develop, so does their weight, particularly for electric vehicles (EVs) that carry heavy batteries. As a countermeasure, many manufacturers are shifting to aluminium to reduce vehicle weight.

How is aluminium produced?

Aluminium (Al) is the third most abundant chemical element on Earth, after oxygen and silicon. It is mainly found in bauxite, a mineral that undergoes treatment with sodium hydroxide to produce alumina (aluminium oxide), which is then processed through electrolysis to extract aluminium.

Bauxite is not found in Japan, but it exists globally, with high-purity deposits found primarily near the equator. It is mined in countries such as Australia, Indonesia, Vietnam and Brazil. Recently, however, several Chinese companies have begun bauxite mining projects in Guinea, Africa.

Aluminium demand continues to grow – what is its growth rate?

Sumitomo Corporation entered the aluminium business in the 1970s. What types of business has the company developed?

In the early stages, Sumitomo Corporation's aluminium business was based on trading activities – buying and selling aluminium. However, what pushed our presence further in the aluminium industry was in 2010, when Sumitomo Corporation invested in Press Metal, a Malaysian aluminium smelting company, and in 2011, in Tri-Arrows Aluminum (TAA), a U.S.-based aluminium rolling company. This allowed Sumitomo Corporation to advance with both trading activities and investment in the aluminium sector.

Press Metal used a unique Chinese-style smelting technology, distinct from the traditional Western methods. There were concerns about risk, and it might have been easy to back out of the investment. However, a passionate young employee at the time insisted that the investment was worth considering, which ultimately led to a positive outcome. Initially, Press Metal produced 120,000 tons of aluminium annually, but after Sumitomo Corporation's investment, production skyrocketed to 1.08 million tons. Without that employee's determination, this success would not have been possible.

TAA primarily uses recycled materials such as aluminium scraps. We are in the process of introducing a furnace that can melt scrap directly to further increase our competitiveness. Although we are in the rolling business, we are moving forward as if we were in the recycling business.

How did Sumitomo Corporation reach its current position in the aluminium business?

The decision to invest in Press Metal and TAA plays a crucial role – both companies were highly competitive and had strong technical capabilities. Another major factor has been the fact that several Japanese companies have scaled back or withdrawn from the aluminium business within the last five years. One reason for this is that about one-third of aluminium production costs are electricity costs, and the use of power from coal or natural gas sources is approaching its limits, both from a cost perspective and in terms of environmental impact. Press Metal, on the other hand, is actively utilizing hydroelectric power, which allows it to excel in both controlling electricity costs and reducing environmental impact. Sumitomo Corporation has accentuated this strength to expand its sustainable aluminium business.

So combining investment with trading activities has led to significant results?

What are the latest trends in Sumitomo Corporation's aluminium business?

There are two key trends we're focusing on. The first is the production of "low-carbon aluminium." This refers to aluminium made using renewable energy sources like hydro, solar and wind power, as opposed to traditional electricity sources like natural gas and oil. Press Metal launched a low-carbon aluminium brand called "GEM" in October 2024.

By branding GEM, we aim to raise awareness of Sumitomo Corporation’s efforts in low-carbon aluminium and differentiate it from other types of aluminium. We intend to add value by offering low-carbon aluminium as a premium product, with the profits generated contributing to Sumitomo Corporation's carbon-neutral initiatives, creating a sustainable cycle.

How does Sumitomo Corporation envision the future of aluminium and how do you plan to leverage this material?

As mentioned earlier, aluminium's greatest strength lies in its lightness.
By leveraging this characteristic, our efforts to expand the aluminium market will contribute to a greener society as a whole. Additionally, if the use of aluminium is to become more widespread, it must also be made greener. A world where all aluminium is made from 100% recycled materials is still a long way off, so it is essential to replace aluminium ingots made from bauxite with low-carbon aluminium wherever possible.

Most recently, we have established a collaborative framework with other departments within Sumitomo Corporation's Energy Transformation Business Group, a sales organization that promotes next-generation energy strategies. We're working together to secure renewable energy for aluminium production and on energy management. By generating renewable energy specifically for aluminium, we hope to grow the aluminium business and integrate the value chain. This is something that only a general trading company like Sumitomo Corporation can achieve. Moving forward, we'll continue to leverage Sumitomo Corporation's strengths in aluminium, with a "trader's mindset" at the core of our approach.