Why are Australian aluminium shares charging higher today?

Shares in Australian aluminium producers are surging after Iranian attacks on smelters in the Middle East over the weekend.

Major producers targeted

Aluminium Bahrain, which operates one of the world’s largest smelters, said on Sunday it was assessing damage to its facility after Iranian attacks over the weekend.

The company said further:

The safety and security of Alba’s people remain its top priority and the Company confirms that 2 of Alba’s employees sustained minor injuries. Alba is assessing the extent of the damage to its facilities and remains focused on maintaining its operational resilience and the safety of its employees. The Company will provide further updates, as required, in due course.

Meanwhile, there was reported to be significant damage at Emirates Global Aluminium’s site after attacks from missiles and drones.

Shares in Australian aluminium producers jumped as a result, with Alcoa Corporation (ASX: AAI) leading the pack with its shares trading 9.2% higher at $93.84.

Shares in South 32 Ltd (ASX: S32) were 6.3% higher in early trade, while Rio Tinto Ltd (ASX: RIO) shares were 2.9% higher at $157.64.

The Reuters report on the attacks said the aluminium suppliers in the Persian Gulf region had already been unable to ship to world markets due to the closure of the Strait of Hormuz.  

Aluminium Bahrain had already shut down lines one, two, and three at its site, “which together represent 19% of Alba’s total production capacity of 1,623,000 metric tonnes per annum, as an operational measure to preserve business continuity amid ongoing supply and transit disruptions affecting the Strait of Hormuz”.

The company said further:

This targeted, line-specific action is designed to optimise the utilisation of Alba’s existing raw materials inventory and prioritise operational stability across Reduction Lines 4, 5 and 6. By concentrating strategic raw materials’ inputs on the most sustainable operating configuration, Alba aims to maintain production resilience, manage working capital prudently, and develop alternatives to reduce exposure to near-term supply volatility. Alba continues to monitor and respond to the situation and will provide updates to the market as appropriate. The Company is also working closely with suppliers and customers to manage commitments and mitigate disruption.

Emirates Global Aluminium claims to be the number one premium aluminium producer in the world, accounting for 4% of global production and 2.83 million tonnes of metal cast in 2025.

Local operators on the ropes

Australia’s aluminium industry has been struggling to survive without government support in recent years, with Rio just last week securing a $2 billion taxpayer handout to keep Queensland’s Boyne smelter operating until at least 2040.

The post Why are Australian aluminium shares charging higher today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.