BMW AG and Emirates Global Aluminium PJSC have struck a deal for the first aluminum produced using solar power, a milestone for both their energy-intensive industries.
The Middle East’s biggest aluminum maker will supply 43,000 metric tons per year of solar aluminum to the German carmaker, the two companies said in statements on Tuesday. They said the deal is worth “a three-digit million-euro sum,” meaning at least 100 million euros ($121 million).
EGA, based in the United Arab Emirates, is the world’s first firm to make aluminum commercially with solar electricity, according to the statements. It will use power generated at the Mohammed Bin Rashid Al Maktoum Solar Park, located in a desert near Dubai. The aluminum will provide almost half of the needs of BMW’s Landshut plant northeast of Munich.
Landshut will play an important role in BMW’s plan to take on Tesla Inc., with the facility supplying components for electric vehicles such as the future iX and i4 models.
The market for low-carbon aluminum is fast gaining traction, with firms including Apple Inc. partnering directly with suppliers as they try to reduce emissions. Electricity generation accounts for around 60% of the aluminum industry’s greenhouse gas emissions. Most smelters still use coal.
“Solar aluminum is a step forward — using a natural and abundant source of energy in our desert environment to make a metal that is vital to our planet’s future,” EGA’s Chief Executive Officer Abdulnasser Bin Kalban said.
BMW said the deal is a step toward lowering CO2 emissions in its supply network by 20% by 2030. By using solar aluminum, BMW will reduce its carbon emissions by 222,000 metric tons annually, EGA said.
The Al Maktoum Solar Park, operated by Dubai Electricity & Water Authority, has a planned production capacity of 5,000 megawatts by 2030.
EGA produces aluminum at a smelting factory close to the Jebel Ali Port in Dubai, one of seven sheikdoms that make up the UAE. The BMW announcement came hours after U.S. President Joe Biden said he would keep tariffs in place on aluminum imports from the UAE, a decision that could impinge on EGA’s business.
© Copyright 2022 Bloomberg News. All rights reserved.