European Aluminium, an industry association of over 80 member companies and aluminium producers, is calling for the European Union to help support the flailing aluminium industry, which has been hard hit by rapidly rising energy prices.
Electricity prices make up around 40% of European aluminium production energy costs. Since 2021, the price of inputs for the industry has leapt by up to 400% due to economic shocks and other geopolitical factors.
Now, half of Europe’s aluminium smelters have been forced to halt or curtail their production of aluminium which is desperately needed by the European economy. By 2030, around 18 megatons of aluminium will be needed for Europe alone, with metal being an important material for the energy sector and Europe's Green Transition.
According to European Aluminium, new energy measures proposed by the European Commission on 14 September, which include emergency intervention in Europe’s energy markets and taxation on excess profits made by energy producers, are a welcomed first step but are not enough to keep the sector alive.
“We’re glad to see the Commission listened to our calls for the need to safeguard hedging possibilities and introduce further incentives for signing renewable power purchase agreements. However, as one of Europe’s most exposed industries, we need much more relief from the exorbitant gas prices to keep our factories open,” says Paul Voss, Director General of European Aluminium.
According to the association, the short-term measures aim to reduce electricity demand and redistribute financial resources to exposed consumers, including energy intensives like the aluminium industry.
But while the measures might provide some much-needed immediate relief, European Aluminium stresses that the proposed measures do very little to tackle the extremely high energy costs.
“We urge Energy Ministers to take additional measures during the next Council meeting on 30 September. Without further action, we risk becoming completely dependent on imports for a material that is key to Europe’s green transition,” Voss said.
European Aluminium braces for the worse
By the end of the year, European Aluminium expects a staggering loss of around 50%, or around 1.1 million tonnes, in primary aluminium production in the EU. European aluminium risks being priced out by increased production in China, where the carbon footprint is almost three times the level of that in Europe.
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High energy prices and disruptions in Europe’s aluminium sector will undoubtedly have significant side-effects throughout the European economy. High energy prices also increase the burden on semi-fabrication (extrusion and rolling of aluminium) as well as the aluminium recycling sector. Recycling of aluminium helps reduce Europe’s reliance on other nations for metals and represents 5% of primary production.
“Right now, not only our competitiveness is at stake; the European aluminium industry is facing eradication,” European Aluminium warns. The group is calling for tougher measures to save the industry from potential collapse.
The group wants the EU’s temporary solidarity contribution, which aims to distribute profits from energy companies to affected sectors of the EU economy, to finance a scheme under the EU Temporary State Aid Framework, which would help “support critical industries in these times of crisis.”
The industrial group is also asking the EU to focus its efforts on curbing the price of gas, which is a critical input cost to the industry.