US DOE’s aluminum study
In the last part of this series, we analyzed the steel industry’s point of view. In this part of the series, we’ll look at an empirical study. The study was conducted by the US Department of Energy (or DOE). The study was done last year. It looked at total life cycle emissions. First, we’ll discuss metals’ life cycle.
Life cycle emissions
The above chart shows steel’s life cycle. It’s important to note that most metals are easily and widely recycled. A metal’s life cycle starts with primary production, continues to end use, and finishes with the metal getting recycled again. The steel and aluminum industries widely use metal scrap as a raw material.
Aluminum and steel are widely recycled
Mini mills—like Nucor (NUE) and Steel Dynamics (STLD)—use steel scrap as a raw material to produce steel. These mini mills produce steel using electric arc furnaces (or EAFs). Mini mills have less fixed operating costs—compared to steelmakers that use blast furnaces.
Blast furnaces use iron ore as the raw material for steel production. US Steel Corp. (X) produces most of its steel through blast furnaces. Currently, it’s among the SPDR S&P Metals and Mining ETF’s (XME) top ten holdings.
Aluminum producers—like Alcoa (AA)—also use aluminum scrap as a raw material. Aluminum production through scrap is less energy intensive—compared to using alumina. Alumina is the basic raw material for aluminum production. It’s refined from bauxite. You can learn more about the aluminum production process in “Must-know: Understanding aluminum’s value chain.”
The study was completed by one of the DOE’s affiliate organizations. The study found that aluminum produces less greenhouse emissions over its life cycle. We’ll discuss this in the next part of this series.