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| U.S. primary aluminum production |
The decline of U.S. primary aluminum production stems directly from high electricity costs and supply instability. According to a new report from SAFE’s Center for Strategic Industrial Materials, affordable power is essential for national security. America now relies on imports for most of its primary aluminum supply. Therefore, domestic smelters need urgent structural energy support to sustain baseline operational capacity.
High Energy Costs Threaten Domestic Smelters and Military Readiness
Aluminum smelting consumes massive energy, requiring 13 to 16 megawatt-hours per metric ton. Power represents roughly 40 percent of total primary aluminum production costs. Meanwhile, data centers drive up local electricity rates by paying up to $115 per MWh. Consequently, U.S. primary aluminum smelters lose critical power access to higher-bidding tech competitors.
Strategic Federal Interventions and Tariff Policy Spur Local Investment
Trade protections under Section 232 have spurred recent private capital investments in South Carolina and Oklahoma. However, long-term power flexibility remains necessary for sustainable primary aluminum smelter operations. Federal agencies must now designate critical industrial loads to protect manufacturing capacity. As a result, expanding domestic secondary scrap recycling will prove vital for long-term supply chain resilience.
ScrapInsight Commentary
The U.S. primary aluminum capacity shortage highlights a fundamental flaw in industrial energy policy, where heavy manufacturing directly competes with AI data centers for cheap baseload power. While Section 232 tariffs incentivize domestic restarts, tariffs alone cannot offset an $81/MWh industrial power rate. Moving forward, policy must explicitly treat secondary aluminum scrap as a core strategic resource while establishing dedicated energy rate offsets for primary smelters.
