Aluminum is a versatile metal. We use aluminum to store beverages, put up buildings, fly airplanes, and drive cars. Given its broad usage, industry experts expect demand for aluminum to grow at a 5% compound annual rate through 2026. Some of the factors driving that forecast include increased infrastructure spending and a drive to become more energy-efficient.
That forecast bodes well for aluminum stocks. Here's a closer look at how investors can benefit from the growth of the aluminum industry.
Top aluminum stocks
Top aluminum stocks in 2024
Several companies focus on producing aluminum or using it to make higher-valued products. Among the industry leaders are:
| Top aluminum stocks | Ticker symbol | Market cap | Company description |
|---|---|---|---|
| Alcoa | (NYSE:AA) | $9.4 billion | A large-scale, integrated aluminum producer. |
| Kaiser Aluminum | (NASDAQ:KALU) | $1.1 billion | A leading producer of semi-fabricated aluminum products. |
| Century Aluminum | (NASDAQ:CENX) | $1.3 billion | A global aluminum producer. |
| Rio Tinto | (NYSE:RIO) | $101.8 billion | A diversified mining giant. |
Here's a closer look at these leading aluminum companies.
1. Alcoa
1. Alcoa
Alcoa is an integrated aluminum producer and one of the world's largest mining companies of bauxite, the primary raw material used to make aluminum. The company owns interests in seven high-quality, low-cost bauxite mines in Australia, Brazil, Guinea, and Saudi Arabia.
Bauxite is refined into alumina at Alcoa refineries. The company operates one of the world's largest third-party alumina businesses, with six low-cost refineries in Australia, Brazil, and Spain.
Finally, Alcoa produces a variety of aluminum products through its smelting and casting operations. Alcoa also operates several energy assets to reduce the costs and carbon emissions of producing aluminum; three-quarters of its smelting portfolio runs on renewable energy.
Alcoa is investing heavily in research and development to reduce its carbon footprint and improve the overall sustainability of its operations. Its major development projects include ELYSIS, a joint venture with Rio Tinto to develop a breakthrough aluminum smelting technology with no direct greenhouse gas emissions. It's also working on a project called ASTRAEA to process post-consumer scrap aluminum into pure aluminum. Overall, the company expects its capital spending to increase on sustainability and return-seeking projects, with the potential to spend even more if it moves forward with some of its new initiatives.
The company also made its first major acquisition in 2024, buying Australia's Alumina Limited. The deal further strengthened its market leadership as a pure-play, upstream aluminum company.
Alcoa also plans to return more cash to its shareholders in the coming years. It reinstated its quarterly dividend in late 2021. In addition, it has a meaningful share repurchase program. Its capital allocation plan positions the company for value-creating growth as it expands and implements its potentially breakthrough technology initiatives.
2. Kaiser Aluminum
2. Kaiser Aluminum
Kaiser Aluminum is a leading producer of semi-fabricated aluminum products. The company produces value-add plate sheet, coil, extrusions, rod, bar, tube, and wire products. The company's customers includes those in the aerospace, packaging, general engineering, custom automotive, and other industrial applications sectors.
The company benefits from several growth catalysts. For example, the packaging industry is steadily shifting from plastic to aluminum beverage and food cans for sustainability purposes. Meanwhile, the aerospace industry is benefiting from growing global passenger air travel. Finally, automotive demand is rising, driven by the need to increase fuel economy and for electric vehicles (EVs).
Kaiser Aluminum's profitable aluminum business enables it to return cash to shareholders via dividends. It offered a 4% dividend yield in mid-2024, putting it well above average (the S&P 500's was less than 1.5%).
3. Century Aluminum
3. Century Aluminum
Century Aluminum is a global aluminum producer. It operates three aluminum smelters in the U.S. and one in Iceland. The company also operates aluminum reduction facilities in both countries. Its facilities produce standard-grade and value-added primary aluminum products.
Century Aluminum is investing heavily to improve its carbon emissions profile. In 2024, the U.S. Department of Energy selected the company to receive a $500 million investment to build a new green smelter. The funding will enable the company to build the first new U.S. primary smelter in 45 years and help accelerate industrial decarbonization.
The company is also expanding the facility where it melts, refines, and shapes aluminum at its Iceland facility. The expansion will enable Century Aluminum to produce more low-carbon products when it finishes the $120 million project in 2024. It also recently completed expansions at its Kentucky and South Carolina smelters to support the growing global demand for aluminum.
4. Rio Tinto
4. Rio Tinto
Rio Tinto is a diversified global mining company based in London. It produces a variety of metals, including iron ore, aluminum, and copper. In addition, it produces several minerals, including borates, lithium, diamonds, salt, and titanium dioxide.
Rio Tinto is an integrated aluminum producer. It has four bauxite mines, four aluminum refineries, and 14 aluminum smelters. It also operates seven hydroelectric plants to reduce its energy costs and carbon emissions.
One of its key long-term projects is its ELYSIS joint venture with Alcoa. The project, supported by Apple (AAPL 1.88%) and the governments of Canada and Quebec, aims to replace the greenhouse gas emissions from the aluminum smelting process with pure, clean oxygen. If successful, the breakthrough technology could eliminate 6.5 million metric tons of greenhouse gas emissions in Canada alone if used in every smelter in the country. That's equivalent to taking about 1.8 million cars off the road. The companies are targeting their first production by 2027.
While Rio Tinto has a leading aluminum business, it's not a pure play on aluminum like the other companies in this group. The mining giant makes the bulk of its money (almost 70% during the first half of 2024) from producing iron ore. Aluminum only contributed 12%, while copper also supplied 14%, and minerals contributed 5%, so it might not be the best option for an investor who is only seeking exposure to the aluminum market.
However, its diversification has its benefits. That includes exposure to other markets (copper and iron ore) that should see accelerating demand due to their importance in reducing carbon emissions.
Related investing topics
Lots of ways to invest in the growing aluminum industry
Aluminum is a versatile and vital metal. Demand should increase in the coming years as the global economy expands, which should benefit companies that produce aluminum and aluminum products, as well as making aluminum stocks an interesting option for investors to consider.
