LME cautious on low carbon aluminium push

''Low carbon is a good example where I don't think you can take the world and divide it into good or bad. But perhaps you can start to have better disclosure, better transparency and then maybe a parallel mechanism where if I have specific preferences as a consumer in terms of carbon footprint, I can go and source those brands and see if they command a premium,'' he told The Australian Financial Review, on a rare trip to Melbourne this week.

''It is clear that global consumer requirements have now matured to a level that I feel very comfortable saying that brands that don't embrace those responsible sourcing principles, they really should not be on the (LME) brand list because it is now just a global baseline expectation that there won't be these human rights violations in any supply chains.

''Low carbon is a much more complex area because we know large amounts of the global aluminium production chain are coal-fired and I don't think we are yet in a position, or indeed may ever be in a position, where the world as a whole is ready to say we are not going to use that.''

Rio Tinto has ramped up efforts in recent years to highlight the low carbon footprint of the aluminium it produces with hydro-electricity in Canada under the brand "RenewAL", which is claimed to have about 66 per cent less emissions than the average smelter.

Rio and Alcoa went a step further in 2018, launching a new joint venture with Apple Corporation called Elysis, which will seek to produce zero emissions aluminium for use in Apple products.

Even without a price premium for its low carbon footprint, Rio's hydro-powered smelters in Canada are cheaper producers of aluminium than 90 per cent of the world's smelters, suggesting the company has much to gain from the low carbon push even as it creates short term pain at Rio's struggling, coal fired smelters in Tasmania, Queensland and NSW.

Those Australian smelters, including one in New Zealand, have collectively lost more than $US150 million ($218 million) over the past year, and Rio flagged last month it was considering shutting its New Zealand smelter to curb losses.

Mr Chamberlain said his visit to Australia was an attempt to hear directly from industry about how they want the LME to evolve on carbon and other matters.

''We have to consider the right way of doing that because even the measurement of carbon content is immensely complex, and I think the important point is we don't want to be re-inventing anything, there is a number of industry bodies that have done a huge amount of work in this space, and it would not be helpful nor right for us to be trying to replicate that,'' he said.