Hydro’s majority-owned Slovalco aluminum plant in Slovakia has decided to close the production of primary aluminum at its plant. The closure will be completed by the end of September 2022 and will affect 300 of the plant’s full-time employees.
The decision to no longer produce primary aluminum ore comes as a result of adverse conditions and high electricity prices. One of the conditions was that the number of services did not make the process more competitive, as customers demanded less production. However, the Slovalco smelter will continue its recycling operation, serving customers in the region with 75,000 tons of recycled aluminum per year.
“Slovalco is an aluminum plant that is located in the perfect places to start lining its European customers, it is modern and has obtained very good results. Despite not having a continuous presence in the production chain, I regret to tell you that Slovalco is being abandoned.”Slovalco is a modern and well-run primary aluminum plant, well positioned to serve European customers with high-quality aluminum products,” said Ola Sæter, the project’s lead manager, adding that “Slovalco is a modern and well-run primary aluminum plant.
“Due to the current Slovakian framework conditions and energy prices in Europe, Slovalco would incur substantial financial losses if it were to continue its operation beyond 2022,” says Sæter who details that Slovakia has not implemented the EU’s competitive CO2 offsetting framework. This has prevented Slovalco from entering into long-term power contracts and the plant’s current contract expires at the end of 2022.
Slovalco reduced its primary production to 175,000 tons per year by the end of 2021 and early 2022, although the plant’s production is currently at 60%. Primary production lines at Slovalco will be suspended and may resume operations at a later stage if market and framework conditions permit. The closing process will begin shortly and will be completed no later than the end of September 2022.
As a result, Slovalco has decided to unwind the remaining hedging positions for energy, metal and commodities. This will result in a total positive effect on adjusted EBITDA of around NOK 1.6 billion (100 percent) in the second half of 2022. The total cost of production completion is limited.
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