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And aluminum demand can tell you a lot about the global economy is a key component and beverage cans automobiles electronics.
And joining me now fox -- exclusive got Phil Martin's sealed -- the world's largest.
-- of aluminum.
Thanks for being with a -- so you -- -- -- aluminum from big makers like your former parent company I guess Alcoa let's say and then you roll it into these products.
And aluminum and all metals are getting clobbered here and -- monitor file was down 2% in a month.
When aluminum prices fall is that good for your business or -- Typically it's not what we want because aluminum prices to affect the spreads that we get on the scrap market.
Miss the world's largest recycler of scrap material what we want to do is have a very comfortable margin between the -- -- -- the only.
So we prefer higher -- me or public television.
The London metal exchange price per metric ton of aluminum pop and so you want that price to be higher or lower than your scrap price all he always wanted to be higher -- that affects your conversion premium -- your -- -- margin.
And so when the but the market price falls that spreads are getting there's going cheaper and cheaper until it gets kind of and yet.
What about recycled aluminum has an answer 45%.
Of your production now uses recycled -- that stuff cheaper than the scrap -- the market.
-- you know absolutely recycled material in our business and reduces costs all the way through from supply chain immaterial processing.
Our goals by the end of the decade to be an 80% recycled content all of our products.
That protects us from the scrap spreads and actually insulates us from the London metal exchange pricing.
It gives us real independence that our business.
Gotta go from 45% of what we make it recycled to 80% of what we make comes from recycled what does that require you to do.
Factory wise it's a huge transformation of the factory system it's the recasting.
The re melting it's the whole rolling process -- your product testing specifications.
But ultimately this is one of those higher calling is where it's absolutely a better business model for our business our customers and at the end of the day the consumer.
Based on what you spend every year on production how much extra what percentage actually have to spend to switch over to more recycled stuff.
And how many years does it take you to make up that difference with the higher profit margin on Michael's great question the the interesting thing about this is our recycling initiatives have the fastest payback of any capital investment we make.
Wow because of the effect it has on the total business but here's -- thing plus people feel like government.
Have to go out there and order industry to start using more recycling and do more green stuff where you ordered by government to take your recycling up to 45% or even take it to 80% in a decade.
Now we weren't we decided that on our own and what we wanted to do a set a visionary target for the industry to actually poll people in the direction of higher recycled content.
You know it reduces the -- issues -- carbon taxes carbon development and production.
But fundamentally it's the best business -- lysine for sustainable business and it doesn't require government intervention to drive us.
Interest and so when the profit motive is there that ends up working far better than some government edict that you have to do stuff the way we say.
This is the same as carbon emissions in the US falling last year to 1990 levels because utilities just I don't -- -- -- -- -- switch over to that there's a lesson there isn't there.
Absolutely I think if people look beyond what governments are asking us to do for mandated carbon emissions in the light and get into the right business models that are sustainable.
You're gonna find the natural evolution in reallocation of capital to better business models to lower carbon.
And be more sustainable in the long run and -- do it because it's the probable thing to do.
And not because it makes him a good citizen of the world if -- -- all capitals at the end of the day and you do do it because it's a profitable thing to do bingo there's -- -- thank you so much for being with us today Phil Martin's -- -- -- -- -- -- But goodness well.
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