By Pratima Desai
LONDON, Aug 17 (Reuters) – Norsk Hydro will shut its majority-owned major aluminium facility in Slovakia by the top of September due to excessive electrical energy costs which present no indicators of falling in the quick time period, the corporate mentioned in a launch on Wednesday.
European smelters are estimated to have lower an annualised 800,000 to 900,000 tonnes of aluminium manufacturing since power costs started to rise final yr.
Analysts say one other 750,000 tonnes of output may very well be lower this coming winter, which might imply bigger deficits and better costs for European customers in the transport, packaging and development industries.
The Slovalco plant, 55.3% owned by Norsk Hydro NHY.OL and 44.7% by Penta Investments Group, with capability to produce 175,000 tonnes a yr of aluminium, is working at solely 60% capability of 105,000 tonnes.
Slovakia’s authorities might have supplied monetary assist by means of the European carbon compensation scheme, nevertheless it hasn’t, Norsk Hydro mentioned.
The CO2 compensation scheme authorised by the European Union permits nationwide governments to award compensation to energy-intensive industries reminiscent of aluminium smelting to assist them recoup a number of the prices relating to excessive carbon costs they want to pay due to the Emissions Trading System (ETS).
“Slovakia has not implemented competitive EU CO2 compensation framework. This has prevented Slovalco from entering long-term power contracts and the plant’s current contract expires at the end of 2022,” mentioned Ola Sæter, chair of Slovalco’s board of administrators.
In international locations reminiscent of Germany, the CO2 compensation for a smelter producing 200,000 tonnes a yr shall be about 67.55 million euros ($72.54 million) this yr, in accordance to Norsk Hydro’s calculations.
Hydro mentioned the choice to shut major manufacturing will have an effect on 300 of Slovalco’s full-time workers.
The casthouse in Slovalco will proceed its recycling operation, serving prospects in the area with 75,000 tonnes of recycled aluminium yearly.
Consumers shopping for aluminium on the bodily spot market pay the LME benchmark aluminium worth CMAL3, which hit a report above $4,000 a tonne in March, plus a duty-paid bodily market premium, which in May hit a report of $615 a tonne in Europe.
(Reporting by Pratima Desai; Editing by Leslie Adler)
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