London Metal Exchange looking into low-carbon aluminium trading

LONDON (Reuters) - The London Metal Exchange said on Friday it is looking into providing a trading platform that consumers can use to source low-carbon aluminium, which is typically produced with hydro power or other forms of renewable energy.

Primary or new aluminium is often a focus for consumers in the low carbon debate as electricity accounts for between 30-40% of production costs. Aluminium is widely used in the transport and packaging industries.

More than half of global supply, estimated at around 63 million tonnes this year, is produced in China, where power is mostly generated by coal-fired plants.

"Our plans include...working with the market to investigate a standalone spot trading platform for the exchange of aluminium warrants, enabling downstream users to procure metal with their required characteristics, such as low carbon," the LME said.

LME Chief Executive Matt Chamberlain last year said the exchange was considering creating a new market for "green" aluminium, using warrants or ownership documents to identify low-carbon metal instead of a new contract.

The exchange is also planning to launch a contract for scrap aluminium, which can be recycled using a fraction of the electricity of creating new metal.

(Reporting by Pratima Desai; Editing by Kirsten Donovan)