The European Aluminium Association lauded the European Union last week on its initiative aimed at reducing the continent’s dependence upon Russian fossil fuels.
In a position paper released by the Association, the organization voiced its support for the “Save Gas for a Safe Winter” program that they say will help alleviate high electrical prices and shortages. Noting that energy costs make up about 40 percent of the production costs associated with aluminium smelting, the Association says that the 50-percent jump in electrical prices have taken a serious toll upon the industry.
The European Association went on to say that, despite cutting around 16 terawatt hours per year in its electricity needs, a further cut in production on those grounds would be for good. In addition, they note that unplanned power stoppages are inherently bad for the industry, as such power losses can cost vast sums of time and money from which to recover.
“Against this background, we call on Member States to carefully implement the newly adopted Regulation and to take a balanced approach when reviewing their emergency plans. Member States must consider that cutting off the supply of gas to the aluminium sector would have a significant economic impact on the whole value chain, including downstream sectors, but gas savings would be relatively low,” explained the Association.
“The technical possibility for some operations to halt production is largely limited and depends on the size and configuration of the plant. Any interruption will impact production and have ripple effects further up and down the value chain. Curtailment plans must carefully analyse the presence of all or part of the aluminium value chain in a given country, possible cross-border impacts of curtailments on neighbouring countries, import dependencies, access to energy supply, impacts down the value chain on both customers and suppliers, as well as the overall economic and financial losses in terms of jobs and growth.”
“Finally, compensation schemes for industry must be proportionate to curtailments, and encompass the fact that in case of curtailed production there will be a cascading effect across the whole supply chain,” concluded the Association.