INTERVIEW-ALFED sees jump in UK aluminium recycling

LONDON, Aug 13 (Reuters) - High energy prices and growing demand for aluminium mean British recycling rates for the metal are set to jump in coming years, the Aluminium Federation (ALFED) told Reuters on Wednesday. Will Savage, secretary general at UK-based ALFED said a recognition that aluminium was a valuable material and rising demand were behind the surge in recycling rates in recent years. "As a valuable commodity which can be regarded as stored energy and as a metal in greater and greater demand, aluminium will of course be recycled in greater volumes," Savage said. "Aluminium recycling rates in the key product areas are 95 percent for building, 90 percent for transport and 32.5 percent for packaging ... The significant use for aluminium scrap in the UK is for recycling into foundry ingot." In 2006 a total of 957,000 tonnes of aluminium was recycled compared with 733,000 tonnes in 2001, Alfed said. The Federation said total figures for 2007 are not yet available. "(However) total consumption of aluminium in Britain last year was approximately 850,000 tonnes, of which about 50 percent was recycled metal," the Federation said. Boring down into the detail, Savage said the recycling rate for aluminium cans now stands at 48 percent compared with 32 percent in 2003. "An interesting and topical fact during the Olympics is that if all the cans recycled in the UK in 2007 were laid end to end, they would stretch to Beijing and back, over 1-1/2 times," he said. "Another interesting fact is that total aluminium metal demand met by recycling in 2006 in the UK was 43 percent compared with 39 percent in the rest of Europe." COST BURDEN More material is being recycled because of high prices for primary aluminium and the spiralling prices of energy, which can account for up to 45 percent of smelting costs. "Aluminium requires only 5 percent of the original power required to smelt it, to recycle it," Savage said. Prices of primary aluminium MAL3 on the London Metal Exchange hit a record high of $3,380 a tonne on July 10 as the market worried about supplies from China, the world's top producer and consumer. LME aluminium trades at around $2,810 a tonne, but that is still nearly double the levels seen in early 2003. Earlier this year, severe winter weather in China, the world's largest producer and consumer of the metal, hit power supplies and boosted aluminium prices. "As an energy intensive sector, like any melting or heating related industry, increasing energy costs have put a heavy burden on the UK's aluminium recycling and processing sector, Savage said. "The UK's aluminium recycling sector has invested heavily in world class capital plant and equipment in order to try to mitigate some of the cost burden of higher energy process." The problem for UK recyclers is compounded by the disparity in energy costs and legislation between Britain and Europe. "Integrated Pollution Prevention & Control (IPPC) legislation for the aluminium recycling sector has been introduced in the UK 7 years earlier than in the rest of Europe," Savage said. "An unreasonable requirement within IPPC that all plant must operate without ever breaking down means every change to plant -- even minor ones with clear environmental benefits -- is subject to sometimes lengthy consultation and variation fees." That inhibits innovation, Savage said. ALFED is the only trade association representing the whole of the aluminium industry in Britain.