By Toby Sterling
AMSTERDAM, Oct 8 (Reuters) – Aldel is halting production of primary aluminium due to the current high electricity prices, the Dutch firm’s chief executive said on Friday.
CEO Chris McNamee told Reuters its plant in Delfzijl, Netherlands, is winding down production now and will be idled from Monday until at least early 2022.
“We’ve got a squeeze on us now because we’re not hedged, and we’re not hedged because the Dutch government isn’t giving us visibility on a level playing field,” CEO Chris McNamee said.
The company, which draws up to 200MW of electricity when operating at maximum capacity, is calling on the Dutch government to compensate it for higher electricity prices.
“We just want the same conditions that the French and Germans have,” he said, referring to a program that allows European countries to compensate energy-intensive industries for costs incurred as a result of higher European prices for CO2.
Analysts say gas prices are the main driver behind surging power costs in Europe, while the cost of permits in Europe’s carbon market has contributed up to a fifth of the increase.
Aldel, the Netherlands’ only producer of primary aluminium, has capacity to produce 110,000 tonnes of primary aluminium and 50,000 tonnes of recycled aluminium annually.
The company signed a contract with Glencore in 2020 to supply 180,000 tonnes of aluminium annually but that is now under renegotiation, McNamee said.
Aldel, owned by York Capital, has 400 employees. McNamee said production of recycled aluminium will continue and it is too early to say whether some workers will be furloughed or eventually laid off while the stoppage continues.
Electricity costs usually make up to 40% of the cost of producing aluminium.
Aldel estimates that the cost of electricity alone is currently 4500 euros per ton of aluminium, while aluminium selling prices, which have also risen, are about 2500 euros per ton.
(Reporting by Toby Sterling; editing by Jason Neely and Elaine Hardcastle)
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