The GFG Alliance and Alcoa are continuing talks over the fate of their aluminium smelter in San Ciprian, Spain, and an official from GFG remains highly optimistic that a long-term solution for the plant’s viability is within reach.
GFG Alliance’s Chief Investment Officer Jay Hambro said in an interview with S & P Global Platts on Monday that energy costs at the plant are key, with the best odds for continued profitability at the site couched in the installation of a power source utilizing renewable energy.
Hambro says the firm is “trying very hard to create a long-term sustainable solution for the San Ciprian smelter.”
“We’re very good at finding ways using a bit of imagination and the phenomenal human resources that we have in-house and our good track record of working with all stakeholders to bring those ingredients together to change the future of industries that a lot of people write off.”
“We’re working with Alcoa to make sure the investments we make – that would have a pay-back period of 10 plus years – would be supported by us having confidence in the supply of their (alumina) refinery,” he continued. “If we can solve all these elements and have the willing cooperation of the vendor I’m pretty sure we can deliver what we do best [which is] changing the fortunes of a business like this.”
Despite GFG’s optimism, its partner in the venture is not nearly as confident in a positive outcome to the talks for the 228 thousand metric tons per annum plant. Alcoa said in a statement delivered to S & P Global Platts on Friday that the two sides still have a great deal of ground between their two positions.
“Twelve days since the agreed date for an agreement on the general conditions for the sale of the aluminum plant at San Ciprian, GFG is still putting forward unreasonable demands which are outside of the negotiated agreement and is risking the sale process.”
The two sides began talks over the plant’s fate last month, with the Spanish government standing in for the plant’s labor force. GFG has requested a 90-day inventory, which Alcoa says is not possible at the site. Meanwhile, Alcoa has offered to sell its interest in the plant to GFG for token consideration and a guarantee to pay US$50 million in escrow while assuming another $50 million in separation costs, plus a five-year alumina supply contract at “reasonable” terms. However, GFG says it wants Alcoa to assume over three times the separation costs it’s offering.
The parties set a deadline for a solution on the plant of September 28. Hambro declined to say whether the deadline is still recognized by the parties when asked.