Can makers seek tariff cut to reduce reliance on sole supplier Aluminum industry pushes back, citing risks to local production and recycling chain

Opposing the proposal is the Brazilian Aluminum Association (ABAL), which points to “technical inconsistencies” and argues that the current 10.8% tariff aligns with global standards. The request is under review at the Ministry of Development, Industry, Trade and Services (MDIC) and seeks to add the aluminum sheet to the Exception List to the Common External Tariff (LETEC). The issue has sparked internal disputes within the industry.

At present, virtually all the aluminum sheet used in Brazil’s can industry comes from a single source: Novelis, which operates a plant in Pindamonhangaba, São Paulo state. The petitioners say this dependency—imports account for less than 1%—poses a risk and limits growth.

“If we were talking about a market that produced one million cans, maybe it would make sense to have just one supplier, though even in this case there would be risks. But we’re the world’s third-largest market, producing 35 billion cans annually—it’s very risky to rely on only one supplier,” said ABRALATAS president Cátilo Cândido in an interview with Valor.

ABAL, in turn, argued that the Brazilian market is open to competition and capable of attracting new players. According to the group, the dominance of the current supplier is due to economies of scale, logistical efficiency, and the natural dynamics of capital-intensive industries like aluminum.

“If there’s concern about supply, the call should be for new entrants. The tariff itself isn’t the barrier—there’s also a lack of investment and the so-called ‘Brazil cost,’” said ABAL president Janaina Donas. She noted that the same arguments were made in 2022, when the tariff was temporarily suspended until the following year.

At the time, industry groups requested an import quota of 200,000 tonnes. The Executive Management Committee (GECEX) approved just 50,000 tonnes. However, only 2,484 tonnes were actually imported under the zero-tariff window—just 1.25% of the original request.

ABAL said this shows that the expected benefits of zeroing the tariff were overstated. According to the group, the measure did not visibly reduce prices or increase competition. “In 2022, the mechanism was used to pressure suppliers. That’s what this is about,” Ms. Donas said.

In 2024, Brazil’s aluminum can industry reached its highest sales volume on record. Supporters of the tariff cut argue that imported aluminum coils would help level the playing field, driving down final product prices.

ABAL, however, said the proposal ignores hidden costs embedded in domestic prices that would become external expenses for manufacturers. For example, Brazil’s current supply chain allows can makers to forgo holding large inventories.

“If they import the product, they’ll need to hold inventory for 30 to 40 days, at a minimum. Right now, the supplier [Novelis] manages that—manufacturers don’t need to carry the stock themselves,” Ms. Donas explained.

Beyond cost concerns, petitioners cite structural and logistical risks. “Every factory has problems—strikes, climate issues, logistical disruptions. Every can produced in Brazil depends on these coils,” said Mr. Cândido.

Asked for comment, Novelis said that it has invested around $1.2 billion in Brazil over the past 12 years to expand production and ensure supply reliability. “In addition, the company helped build Brazil’s aluminum can recycling system, considered a global benchmark, which generates income for over 800,000 waste pickers,” it said in a statement.

ABAL noted that the proposed changes would jeopardize that infrastructure. “They want to harm the national industry and dismantle a supply chain—including the recycling system—that they themselves rely on to meet their commitments,” Ms. Donas said.

In a statement to Valor, the MDIC said the request has been under review since December 19, 2024. On March 27, ABRALATAS and SINDICERV representatives met with Vice President and Minister Geraldo Alckmin to reiterate the demand.