The global and metals sectors look back on a number of volatile years. The global downturn, increased regulation and changing investor demands are rapidly transforming the industry.
One company at the heart of this ecosystem is LSE-listed En+ Group, the largest producer of low-carbon aluminium globally and the world’s largest hydropower player, with nearly 90,000 employees in dozens of countries around the world.
In a wide-ranging, two-part interview, City A.M. caught up with Lord Gregory Barker of Battle, who was appointed independent chairman of the En+ board of directors in October 2017, just before the company’s IPO in London. In February 2019, he became executive chairman of the board.
Lord Barker was previously a member of the House of Commons from 2001 to 2015. From 2010 to 2014. he served as UK Minister of State for Energy & Climate Change under Prime Minister David Cameron. He was made a life peer and member of the House of Lords in 2015.
Before we zoom in on the energy sector, most people may know you from your years in parliament and government. You look back on an interesting and colourful career in politics. What do you miss most about Westminster?
Very little indeed! I was very lucky to serve in public office for nearly fifteen years but it is a very hard and demanding work-life balance and I don’t miss that. In politics, you do get a real sense of achievement by being involved in things that have a very material public service benefit.
I’m very lucky in that, even now I’m working a million miles from Westminster in trying to drive the aluminium sector towards a low carbon future, I am still having an impact on more than just business.
The aluminium sector emits more carbon than countries like Germany and Japan, so if I can try and influence that then it will be as meaningful as many of the things I was able to do in politics.
Let’s jump to En+ Group: an Anglo-Russian energy and metals giant, listed on the LSE, with a controlling stake in Rusal, the second largest aluminium producer in the world, what are some of the biggest commercial challenges or hurdles you are currently facing?
In a fast changing world, the biggest commercial challenge is keeping up with the ambition of our customers. We set the pace in the industry on low carbon ambitions when we announced our 2050 net zero ambition and 2030 targets earlier in January, and in doing so we aligned ourselves fully with our customers and the end users of our product.
The challenge for us now is to deliver.
While we are already the world’s largest producers of low carbon aluminium, the challenge of taking this further shouldn’t be underestimated. It is going to require determination and skill from our management and over the next decade, massive new investment in the business as a whole to meet these transformational targets.
Last month EN+ announced its intention to demerge its high carbon assets. What is the rationale behind this move?
The rationale was very simple. Although the two parts of the business were headed in the same strategic direction of a net zero future, it became clear that each company would require different industrial technologies and capital requirements to achieve our sector-leading carbon reduction ambitions.
The separation into two independent and focussed businesses will empower each business to go further and faster.
The new structure will allow separate management teams to focus on ambitious but very different decarbonistion plans, involving quite different technology investment programmes and timelines.
We have already set a sector leading target of a 35 per cent reduction in greenhouse gases by 2030, and whilst some of the technology needed to hit these targets is already in development, such as our inert anode technology, other technologies required in some of the more high carbon assets, such as carbon capture, are not realistically going to be at a commercial scale until well into the 2030s. While we don’t underestimate the many challenges of the transition, the goal for both companies is uncompromisingly net zero.
As one of the largest producers of low-carbon aluminium in the world, where does EN+ see opportunities for further growth?
There is no doubt the electric vehicle market is a huge opportunity for us, but anything in the transport space where you are seeking to make something lighter and therefore more energy efficient is an opportunity. However growth is not limited to EV or other forms of transportation such as shipping, haulage and aviation; we are also seeing an increased use of aluminium in sectors such as infrastructure and construction too.
We are developing internally inert anode technology in aluminium smelting – breakthrough science that can turn what is a huge carbon emitting industrial process into one that emits virtually zero emissions.
There is going to be huge demand for zero-carbon aluminium and, as we produce more value-added products that have greater strength and flexibility, the number of applications for this essential material for building the low carbon economy will increase.
You are also a global leader in hydropower, how do you see the future of that market?
Hydropower is having a real renaissance with gases now measured with far more accuracy and discipline. This discipline brings huge opportunity as, managed properly, this is a massive clean energy source that can be dispatched in a way that is reliable and at huge scale. Unlike other sources of clean electricity, hydropower is a natural partner for heavy industry because, in the right circumstances, it can generate at real scale.
To give that context, our assets around Lake Baikal generate 16 gigawatts of electricity, which is more than all of Britain’s nuclear reactors put together.
It is a big and reliable clean energy resource; the challenge will be how you create new assets that are also sustainable in their construction. It can be done, but clearly building new hydro plants at scale is not as simple as putting up a wind turbine.
Do you think EN+ should diversify its product range more?
We have already begun to invest in solar PV as well as hydropower but we have so much opportunity in aluminium and clean energy that I don’t see us diverting away from that any time soon. What we can do is increase our exposure to value added aluminium products. We have just made an important acquisition in Germany and I think you could see other incremental acquisitions or investments to further improve our share of the value-added products market.
Your company has around 90,000 employees around the world. How do you manage such an enormous workforce?
By empowering local management and having very strong local relations with workforce representatives we are able to make it a successful relationship. I think it’s important for stakeholders to understand that senior management don’t just appreciate their concerns, but that they are directly reflected at the highest level.
To that end I was very pleased that this year we welcomed onto the Board someone who had been drawn from the trade union movement.
Our employees themselves must take a huge amount of the credit; their efforts throughout the Covid-19 pandemic has been exemplary and their commitment, whether it be those working from home or others who isolated themselves from their families and friends, has been deeply impressive.
Thank you. Tomorrow we will discuss climate change, the role of the energy sector in this process as well as the upcoming COP26 conference, taking place in Glasgow later this year.