Spiralling energy costs force Belgian companies to shut down

Spiralling energy costs force Belgian companies to shut down
The industrial park Genk Zuid, with steel production plant Aperam and several wind turbines. BELGA PHOTO ERIC LALMAND

Several companies in Belgium have been forced to shut down their production facilities due to high energy prices, meaning thousands of employees are currently temporarily out of a job.

Stainless steel producer Aperam is shutting down its production facility in Genk due to the high energy prices, while fertiliser producer Yara and flooring group Beaulieu are also winding down operations, De Standaard reports.

High energy prices are increasingly hurting industries. Energy-intensive companies competing in the global market are in particular trouble.

Stainless steel producer Aperam announced that it has not yet resumed production after the summer holidays, leaving several hundred of the 1,250 employees at its largest site in Genk temporarily unemployed. The site near Charleroi is also partially closed. These two plants are where the Luxembourgish Aperam melts scrap into stainless steel.

“We collect old scrap and melt it down into stainless steel,” says Bernard Hallemans, CEO of Aperam Europe. “We mainly melt this in high temperatures in ovens that run on electricity. We also need gas for certain operations but due to the high energy prices, we are now operating at a loss.”

“In the past, we spent tens of millions of euros per year on gas and electricity; at current prices, it is several tens of millions per month.”

Competition from Europe and beyond

Yesterday, fertiliser producer Yara also announced that it will close its site in Tertre in Wallonia from 15 September. It is no longer financially viable to make fertiliser in Europe, given that natural gas is key to the process.

Beaulieu International Group also announced yesterday that it is relocating a yarn division in Komen, Wallonia, to a branch in northern France, as energy rates are lower there.

According to Hallemans, Aperam Genk will restart in September to complete existing orders. But he fears for the future: “We cannot compete with players outside of Europe. Even within Europe, there are major differences in electricity prices.”

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For instance, a competitor in Scandinavia pays much less for electricity thanks to hydropower plants. Competitors from Spain and Portugal are also paying less for energy thanks to price caps.

“Europe imports 40% of its stainless steel from outside Europe,” says Hallemans. “In Asia, electricity prices have risen much less sharply. I don’t see the situation in Belgium improving any time soon. Energy prices continue to rise.”

His argument is in line with more and more experts who warn of a major structural loss of competitiveness in European industry. If Aperam can no longer produce profitably, the stainless steel or fertiliser market threatens to fall completely into the hands of Asian or American players.

The first of many

Peter Claes, director of Febeliec (the umbrella organisation of energy-intensive companies), fears that Aperam and Yara will not be the only companies that will have to halt production because they can no longer compete in international markets. The gas price in Belgium is now ten times higher than in the US.

“The high energy costs will be felt drop by drop in the industry, with all the consequences that entail for the economy and employment. For some companies, it has even become more profitable to sell the gas they still have in stock than to use it for production.”

Hallemans appeals to politicians in both Europe and Belgium: “The major European differences in electricity and gas prices must be eliminated.” He hopes that the Belgian government will temporarily adjust the price mechanism for electricity and that the electricity generated via expensive gas-fired power stations will no longer determine the final price.

However, this must be done at a European level and requires considerable research and analysis.

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