Wed, May 27, 2026 page7

• The Iran war is coming for your Diet Coke

  • By David Fickling / Bloomberg Opinion
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  Geopolitics is making it harder for India’s 1.4 billion people to cool off in the punishing summer heat. Things are about to get a whole lot worse.

  The problem right now is with Diet Coke. The closure of the Strait of Hormuz has disrupted exports of aluminum from smelters in the Persian Gulf, which account for about one-fifth of supplies outside of China. That has hit beverage manufacturers in India, where the soda is only available in metal cans, in turn sparking a burst of end-times hedonism.

  With the mercury nearing 49°C, restaurants and bars have hosted “Diet Coke Parties,” where entrants pay up to US$16 a ticket to get access to jalapeno-spiked cola cocktails, T-shirt painting and raffles with scarce cans of the drink as prizes.

  Beneath all the hilarity, there is a serious issue. The most concerted global effort to insulate households and businesses from the chaos spiraling out of war in the Middle East is a mass drive for clean electrical energy.

  Power generation from wind and solar overtook gas for the first time last month, according to Ember, a transition-focused think tank. Chinese exports of solar panels, electric vehicles and batteries have jumped 31, 75 and 45 percent respectively in value so far this year, as consumers around the world sought out power products that do not depend on oil and gas.

  However, almost every one of those electrical devices depends on the same aluminum that is disappearing from the refrigerators of Indian supermarkets and neighborhood kirana stores.

  ENERGY TRANSITION

  It is common to think of copper as the archetypal electrical metal, but there is a decent argument that it is aluminum instead. While copper wires are preferred inside electrical devices because of their higher conductivity, aluminum is cheaper. That means it is used more for long-distance transmission cables, and increasingly even for complex pieces of infrastructure such as transformers and switchgears. Global power networks consume about twice as much aluminum as copper, consultancy Thunder Said Energy said.

  That is the place where the energy transition is most at risk. The shift to clean power could be put in jeopardy because of the slow buildout of grids, International Energy Agency executive director Fatih Birol said.

  About 1,700 gigawatts of clean generation is currently completed, but stuck in line waiting for a connection, he added last year. That useless capacity is equivalent to about one-third of all the renewables installed to date.

  Clearing that backlog depends on access to aluminum. High-voltage transmission lines can easily cost more than US$310,000 per kilometer on conducting wire, making up more than 10 percent of the expense of a new project and 80 percent of some upgrades. Grid managers are already struggling with the headlong expansion of power-hungry artificial intelligence, with US$653 billion expected to be spent on data centers this year alone. Rising costs for aluminum make all of that worse.

  Primary metal traded on the London Metal Exchange has already increased by half over the past year to about US$3,637 a tonne. Conditions in the aluminum market are the most bullish in 50 years and the metal could rise a further 50 percent next year, Citigroup Inc wrote recently.

  Such forecasts do not look excessive. Even with an opening of the Strait of Hormuz, the Gulf’s aluminum production will not quickly return to normal. Emirates Global Aluminium PJSC, the largest in the region, sustained hits from drones and missiles that appear to have frozen some of the thousands of electrolytic cells where molten metal is smelted. That is a disastrous situation, requiring parts of the production line to be rebuilt almost from scratch. The company expects a restart to take up to 12 months.

  CHINA TO THE RESCUE?

  Normally, China’s amply supplied metal sector could be expected to come to the rescue, but that is less likely this time. China produces about 60 percent of the world’s aluminum, but consumes almost everything it makes. It has its own renewables and grid buildout to worry about, and is also in the middle of moving millions of tonnes of smelting capacity to renewable-powered locations deep inland. That limits its ability to rebalance the world market through an export surge.

  Even Indonesia, which had been expected to loosen the market by adding a Gulf-sized 7.6 million tonnes of smelting capacity over the next few years, is looking more dicey now. The government this week announced plans for sovereign wealth fund Danantara to take control of palm oil, coal and nickel exports. Such policies could put off the foreign investment needed to support the new plants. Indonesian President Prabowo Subianto’s more nationalistic stance could also reserve metal for use in domestic manufacturing, starving the global market.

  All of that would put sand in the gears of the energy transition, just when we need it to be speeding up. If you want to survive the brutal heat of the coming few summers, do not get too dependent on steady grid power for your air conditioner. A cooling can of Diet Coke might be the better way — if you could just get your hands on one.

  David Fickling is a Bloomberg Opinion columnist covering climate change and energy. Previously, he worked for Bloomberg News, the Wall Street Journal and the Financial Times. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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