Dutch aluminium producer Aldel announced on Friday that it will be suspending production of primary aluminium due to the high cost of electricity.
Commenting to Reuters from its aluminium plant in Delfzijl, the firm’s CEO Chris McNamee said that production ended Monday and is expected to remain idle until early next year.
“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.”
Aldel uses approximately 200 mW of electricity when running at nameplate capacity. Due to the recent increase in electricity prices, the firm said that continued production of primary aluminium would require some form of state subsidy. At current prices, electricity costs €4,500 per metric ton, while aluminium has recently been selling at €2,500 per metric ton.
“We just want the same conditions that the French and Germans have,” McNamee indicated.
Several other European companies indeed offer electricity subsidies in an effort at offsetting higher energy prices encountered thanks to restrictions on CO2 releases. High energy prices are also heavily influenced by a corresponding increase in energy prices on the continent.
Aldel signed a contract with Glencore in 2020 to supply 180 thousand metric tons of aluminium per annum from its plant, which produces 110 thousand metric tons of primary aluminium and 50 thousand metric tons of recycled aluminium each year.
Though production of primary aluminium will cease, McNamee indicated that production of recycled aluminium will continue. He said no decision had yet been made regarding possible furloughs or layoffs of the plant’s 400 workers.