UK aluminum squeezed by weak production, soaring demand, and high energy costs - what's the way forward?

UK aluminum demand vs production

According to 2024 analysis, aluminum consumption in the UK domestic market was about 296,000 tonnes, of which primary aluminum demand was 167,000 tonnes and secondary aluminum demand was 129,000 tonnes. The market value, which was at USD 2.03 billion in 2023, is poised to grow at a CAGR of 3.2 per cent to USD 2.65 billion by 2030. In contrast, aluminum production decreased from 320,000 tonnes in 2000 to 103,000 tonnes in 2024.

In the UK, domestic aluminum production tumbled but not the demand. As a result, the country turned to imports to fill the gap. In 2024, the United Kingdom imported 882,503 tonnes of aluminum, up by 4.38 per cent from 845,446 tonnes in 2023. In the first eight months of 2025, the country hauled 626,843 tonnes of aluminum versus 566,995 tonnes a year ago.

This rising strategic dependence is precisely why the UK Government added aluminum to its list of critical minerals in March 2025. Aluminum, thus, now sits alongside lithium, cobalt, and rare earths – which itself is a sign of its essential role in transportation, aerospace, defence, communications infrastructure, renewable energy systems, and electric vehicles. But political acknowledgement means little when the economics are stacked against domestic production.

Crippling energy costs at the epicentre – what ALFED says and does

Energy costs remain the industry's Achilles' heel. UK industries pay 50 per cent more for energy than competitors in Europe's major economies. The Aluminum Federation (ALFED) has warned several times that this price disparity is posing critical threat to the competitiveness and sustainability factor of the aluminum industry. In June 2025, ALFED formally wrote to the UK government, calling for UK electricity prices to be aligned with European standards, for ARENH-style contracts or Iberian-style gas caps to shield industry from extreme volatility, and for a cross-departmental road map outlining long-term industrial energy reform.

"If we cannot produce aluminum competitively in the UK, we compromise the country's ability to deliver on its own industrial and national security objectives," said Nadine Bloxsome, CEO of ALFED.

The government's answer came five months later in the November 2025 Budget: the British Industrial Competitive Scheme (BICS), designed to reduce electricity costs for manufacturers. However, the problem is it will not take effect until 2027 - a delay that many producers simply cannot absorb. ALFED has thus called for more urgent support, pointing out that aluminum producers will remain at uncompetitive energy price risk in the near term.

In a statement on the Budget, Ms. Bloxsome said: "The Budget acknowledges many of the pressures facing the aluminum and metals sectors, but support such as BICS needs to come sooner, not in 2027 – some businesses will not have that long to wait."

Bridgnorth Aluminum urges for relief and why it matters

Bridgnorth Aluminum, the UK's leading manufacturer of flat rolled aluminum coils and the only fully integrated UK operation, had also echoed the urgency for a relief from staggering energy costs ahead of the Budget 2025. It pointed out the country pays the highest energy bills among all G7 countries, and Bridgnorth pays more than 1 million pound for electricity and gas each month. The company, thus, wants promised support of the British Industrial Competitiveness Scheme in addition to the help available through the Energy Intensive Industries scheme. Curtailing excessive taxes could also help the aluminum and other base metals manufacturers to alleviate the rising energy cost impact. The demand from Bridgnorth is straight and simple "We want aluminum to receive the same standing and political attention as steel."

Skilled workforce is another major demand of Bridgnorth from the government. Adrian Musgrave, commercial director at Bridgnorth Aluminum said, "Skills is another major issue for our sector, and we would welcome any changes to courses that accelerate the ability for young people to learn greater technical skills – making them work ready in the process."

Amidst all the ongoing challenges concerning trading conditions, Birdgnorth has still posted an impressive 9 per cent rise in sale during 2024. The company also has 2 million pound investment plans to produce higher quality aluminum for electric vehicle batteries and packaging – two major markets that drive aluminum demand. In 2024, primary aluminum demand in the UK was 167,000 tonnes and secondary aluminum demand was 129,000 tonnes.

UK Budget 2025

However, what finally came out in the Budget 2025 was a mix of opportunities and challenges for the UK metals industry. Opportunity is the introduction of the British Industrial Competitiveness Scheme (BICS) aimed at cutting electricity costs for manufacturers, but the challenge is the scheme will not come into effect until 2027. The Budget also confirms the exclusion of indirect emissions generated from electricity usage from the UK's Carbon Border Adjustment Mechanism when it comes into force in 2027. Instead, indirect emissions will be considered from 2029 at the earliest. The challenge due to this policy is aluminum with certain level of carbon footprint will be allowed in the UK.

The Budget has also brought other changes to CBAM structure like sector-average emissions-based free-allowance  calculations, recognition of carbon costs already paid under other CBAM regimes,  and exemptions for UK-produced precursor goods in complex imports to avoid  double carbon pricing.

Following the Budget, ALFED has urged its members to reassess their energy strategies and prepare for CBAM compliance while recognising the limited short-term support. But the situation is stark. The UK has built a policy framework for 2027, while the industry needs lifelines in 2025 and 2026. Every tonne of aluminum made using market-priced electricity carries a competitiveness penalty that producers in Europe and beyond simply do not face.