Exploring the impact of ESG practices on Thailand's aluminium industry

The lightweight, durable, and corrosion-resistant properties of aluminium make it a preferred choice in various construction applications, ranging from structural components to façade systems.

As Thailand's construction industry continues its upward trajectory, the demand for aluminium remains a critical factor in shaping the market landscape. With an eye towards sustainable development and embracing emerging trends, it's imperative to delve into the nuances of this vital sector.

Looking ahead, market projections indicate a promising outlook for the aluminium industry in Thailand. With the construction sector projected to grow at a CAGR of over 5% to hit US$ 34 billion by 2029, the demand for aluminium is expected to follow suit, underpinning the market's expansion. Furthermore, the government's ambitious infrastructure projects, including transportation networks and urban development initiatives, are poised to drive additional demand for aluminium products.

An Evolving Industry

Despite the positive outlook, several factors are expected to influence the dynamics of Thailand's aluminium market. Fluctuations in raw material prices, geopolitical tensions, and regulatory shifts may disrupt the global aluminium supply chain, impacting import-export dynamics and pricing stability domestically. This becomes an issue when you take into consideration that Thailand imported nearly US$ 751 million of aluminium in 2022 alone. 

Along with the challenges, evolving consumer preferences towards eco-friendly and sustainable materials are likely to reshape market dynamics, necessitating adaptation and innovation. As consumers become more environmentally conscious, demand for aluminium products manufactured using sustainable practices, such as recycled aluminium and energy-efficient production methods, is expected to rise.

Additionally, technological advancements in the aluminium industry, including the development of high-performance alloys and novel fabrication techniques, are poised to revolutionize product offerings and enhance market competitiveness. These innovations not only improve the performance and longevity of aluminium products but also contribute to resource efficiency and environmental sustainability.

Embracing ESG Principles

In line with global trends, environmental, social, and governance (ESG) considerations are gaining prominence within the aluminium industry. Stakeholders across the value chain are increasingly emphasizing sustainability practices, driving the adoption of eco-friendly technologies and processes. World Economic Forum expects industries like construction and automotive to drive a nearly 40% increase in global aluminium demand by 2030 - from 86.2 million tonnes (Mt) in 2020 to 119.5 Mt. It is important to make this growth sustainable. 

In the context of environmental sustainability, the aluminium industry is facing increasing pressure to minimize its carbon footprint and adopt eco-friendly practices throughout the value chain. This entails not only reducing emissions from production processes but also addressing concerns related to energy consumption, water usage, and waste management. To mitigate environmental impact, the industry has invested in renewable energy sources, implementing recycling initiatives, and optimizing production technologies to enhance resource efficiency. 

The industry is embracing initiatives such as life cycle assessments and carbon footprint to quantify environmental impacts and identify areas for improvement. Recycled aluminium is also on the rise. By leveraging recycled materials, manufacturers can reduce energy consumption, minimize waste, and lower carbon emissions, aligning with sustainable development goals. However, it brings with it the challenge of lower scrap generation. Globally, and in Thailand, the demand for aluminium is too high to be fulfilled by recycled aluminium alone. Eco-friendly Primary Aluminium is also key.

Meanwhile, stakeholders are actively exploring innovative alloy formulations and enhanced manufacturing processes to optimize performance while minimizing environmental impact, thereby redefining industry standards.

One notable player leading the charge for sustainable practices and innovation in the aluminium sector is RUSAL. With its dedication to producing low-carbon aluminium by sourcing electricity from mainly hydropower stations, RUSAL plays a pivotal role in the current Thai economy and its greener future, providing a continuous supply to the market.

The aluminium industry is also increasingly focusing on social responsibility and governance practices to ensure ethical and transparent operations. This involves fostering safe and inclusive workplaces, upholding human rights standards, and engaging with local communities to address social concerns. Sound governance practices, including robust risk management frameworks, transparent reporting mechanisms, and adherence to regulatory requirements, are essential for building trust and credibility with stakeholders. By integrating these principles into business operations, companies can enhance their brand reputation, mitigate reputational risks, and foster long-term relationships with investors, customers, and communities. 

In conclusion, Thailand's aluminium market stands at a pivotal juncture, poised for continued growth and evolution. As the construction industry surges ahead, driven by urbanization and infrastructure development, the demand for aluminium remains steadfast. However, the industry's success hinges on its ability to adapt to emerging trends, embrace sustainability principles, and navigate dynamic market forces. By prioritizing innovation, environmental stewardship, and responsible governance practices, stakeholders can unlock the full potential of the aluminium market in Thailand, driving sustainable growth and creating lasting value for the construction industry and society at large.

Nobuhiro Koyanagi

Asia Sales Director, RUSAL