India & 2050 aluminum prospect: demand is certain, India's advantage isn't

Those projections are not abstract for India. The country is already the world's second-largest producer of primary aluminum, accounting for roughly 6 per cent of global output in 2023, and has seen production more than double over the past two decades from about 1.7 million tonnes in 2003 to just over 4.1 million tonnes in 2023. However, the same period has also seen a sharp rise in imports of metal and scrap, suggesting that India is sliding into the 2050 supercycle, with both opportunities and vulnerabilities built into its aluminum system.

Where India really stands in 2025

On the production side, India's primary aluminum output has been on a modest upward trend. Ministry of Mines data and industry summaries show primary production rising from around 3.6 million tonnes in FY2021 to roughly 4.2 million tonnes by FY2024. Ministry of Mines estimates place India's share of world primary production at about 5.7 per cent in FY2024-25. On those numbers, India is a serious global producer, but not yet a dominant one.

Consumption tells a different story. An earlier National Aluminium Company (NALCO) investor disclosures summarising sector data suggest India's aluminum consumption in 2023-2024 was around 4.9 million tonnes, with demand projected to reach about 8.3 million tonnes by 2030, implying a CAGR of 8 per cent per annum. Other market assessments point to a similar trajectory, with some placing expected demand near 9-10 million tonnes by the early 2030s.

Over the past 14 years, the Aluminum Association of India (AAI) has estimated that domestic aluminum consumption has increased by about 160 per cent, while imports of aluminum products have risen by around 250 per cent and scrap imports by roughly 285 per cent.

The structure of that demand is equally important. Recent market reports and industry commentary indicate that the power sector accounts for roughly 48 per cent of India's aluminum use, followed by transport at around 15 per cent and building and construction at about 13 per cent, with consumer durables, machinery and packaging making up most of the balance.

Per capita consumption remains low by global standards. AL Circle estimates for 2025 put India's per capita aluminum use in the 3.9-kilogram range, compared with a global average near 11 kilograms.

A long-term demand with a near-term price shake

Analysis by the International Aluminium Institute (IAI) and other industry platforms suggests that, under scenarios consistent with stated climate and development policies, total global aluminum demand could reach the equivalent of 335 million tonnes a year by 2050, counting both primary and recycled metal. The bulk of that growth is expected to come from transport (particularly electric vehicles and light-weighting), construction (especially in rapidly urbanising Asia and Africa), packaging and electrical infrastructure.

The near-term outlook is more volatile. London Metal Exchange (LME) prices averaged about USD 2419 per tonne in CY2024. In April 2025, Goldman Sachs revealed its price forecasts for 2025-27, projecting a short-term soft patch with prices averaging around USD 2,300 per tonne in the fourth quarter of 2026 from the present range of USD 2700 per tonne before rising toward roughly USD 2,800 by 2027 as market deficits re-emerge.

While different studies produce different numbers, a common thread in the more conservative scenarios is that primary aluminum demand continues to grow into the 2040s and, around mid-century, reaches the order of 110 million tonnes per year, even as recycled metal takes a larger share of total use.

Energy and carbon - the uncomfortable centre of India's cost base

Aluminum is a power-hungry metal. Globally, the aluminum sector consumed about 7 exajoules, or roughly 1,944 terawatt hours, of energy in 2023, making it the fourth-largest industrial energy consumer worldwide. While the sector's overall energy intensity has improved by around 15 per cent since 2010, most primary smelters are already relatively close to best-available technology, meaning future gains will depend increasingly on decarbonising the power supply rather than dramatic efficiency breakthroughs.

India's aluminum producers are at the sharp end of that reality. The country's grid remains heavily coal-based. Captive coal-fired power plants are still the backbone of most large smelter complexes. This makes Indian primary aluminum particularly exposed to carbon-related trade measures.

The European Union's Carbon Border Adjustment Mechanism (CBAM), now in a transitional phase and scheduled for full implementation from 2026, will gradually impose a carbon price on imports of aluminum and other energy-intensive goods to mirror the EU Emissions Trading System.

The European Commission has recently confirmed that while indirect emissions for metals will not be included initially, pre-consumer scrap will be treated as a separate product category, a nuance that still leaves Indian producers with significant exposure, given the direct emissions profile of coal-based smelting.

Benchmark emission intensities for aluminum electrolysis under CBAM rules point to a figure of about 1.55 tonnes of CO₂ equivalent per tonne of aluminum from 2026 as a reference point. Many Indian smelters, depending on their power mix, sit above that threshold.

In April 2025, Rio Tinto signed a MoU with India-based AMG Metals & Materials to explore a low-carbon aluminum project in India, with a concept of up to 1 million tonnes per year of primary aluminum and 2 million tonnes of alumina powered by a combination of wind, solar and pumped hydro storage.

But one project cannot, on its own, rewrite the sector's emissions profile. For India to remain competitive in a 2050 world where buyers and regulators will scrutinise embedded carbon, a broader shift in energy sourcing for smelters - through renewable power purchase agreements, hybrid grid-captive models and potentially dedicated green energy corridors - will be necessary rather than optional.

Recycling and circularity's ability to absorb the shock

The second structural lever available to India is secondary, or recycled, aluminum. India has made some progress in increasing the share of secondary metal in its consumption mix. India's 'Vision Document 2047' on the aluminum sector notes that the share of secondary aluminum in total consumption has risen over the past decade, even as primary continues to dominate. At the same time, it flags the difficulty of sourcing enough domestic scrap and the challenges associated with importing scrap at scale.

AAI's own analysis, highlighting a near-threefold surge in scrap imports over 14 years, emphasises how dependent India has become on external scrap flows.

Policy is beginning to respond, albeit indirectly. In October 2025, AAI publicly urged the government to raise import duties on aluminum products to 15 per cent and tighten quality norms for imported scrap, arguing that a flood of low-priced imports is undermining domestic investments of more than USD 20 billion in capacity.

In parallel, the Union Cabinet has approved an INR 1,500-crore incentive scheme for critical mineral recycling from FY2026 to FY2031, covering e-waste, lithium-ion batteries and end-of-life vehicles - an important signal that Delhi sees recycling as a strategic tool to reduce import dependence on key materials, even if aluminum is not its primary target.

The problem is that India's scrap ecosystem remains fragmented and largely informal. Collection rates for post-consumer aluminum in building materials, vehicles and consumer durables lag global benchmarks; formal segregation and tracking at end of life are the exception rather than the rule.

Without a concerted strategy that links urban mining, formal scrap collection, modern sorting and high-efficiency secondary smelting, India risks being squeezed in both directions, paying high prices for imported primary metal in a tight market, and high prices for imported scrap in a world where circularity becomes a key source of comparative advantage.