Europe Aluminum Cuts Get Deeper By The Day As Power Crisis Bites
Speira GmbH is the latest European aluminum producer to reduce production in response to soaring energy costs.
(Bloomberg) -- European aluminum is buckling under the pressure of surging energy costs, with two more producers announcing cuts in the past day as the local metals industry reiterated it’s facing an “existential threat.”
Speira GmbH will cut production at its smelter in Germany by 50% until further notice, while Europe’s largest aluminum smelter, Aluminium Dunkerque Industries France, said on Tuesday it will reduce production by 22% by the end of the month.
The curtailments add to the extreme toll that the energy crisis is having on Europe’s metals industry, which is one of the biggest industrial consumers of power and gas. A group representing the region’s biggest producers wrote to European Union politicians warning that the energy crisis could cause “permanent deindustrialization” in the bloc, unless a package of support measures are implemented.
The region’s aluminum and zinc production capacity has already fallen by about 50% within the past year, even before the latest cuts, and aluminum output has dropped to the lowest levels since the 1970s. Aluminum is particularly vulnerable because it is massively power intensive. It’s also difficult and costly to restart smelters once they have closed.
Some plants are protected by government subsidies, long-term electricity deals or access to their own renewable power. But industry insiders say the escalating energy crisis could mean large swathes of the region’s aluminum capacity is switched off permanently.
“We are facing similar challenges as many other European aluminium smelters,” Speira CEO Einar Glomnes said in a statement on Wednesday. “Energy prices have reached too-high levels over the last months, and we don’t foresee those to fall in the short-term future.”
Speira expects the curtailment process to be completed in November, and it doesn’t plan to make forced job cuts, it said. The company told Bloomberg it was considering the move last month.
In its letter on Wednesday, industry group Eurometaux called on politicians to “look at all available options” to safeguard the sector, including measures to reduce prices from fossil-fuel generators, and an expansion of state aid relief.
The EU should also evaluate “options for temporary solidarity measures to rebalance the windfall profits in other specific sectors during this crisis,” the group said in the letter, which was signed by 40 of the region’s leading metal producers and processors.
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