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MEI Online: Commodities: Metallic Ores: Aluminium: Latest News: March 31st 2005


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:: Alcan Reviews European Smelter Options  

Alcan Inc, the world's second-largest producer of primary aluminium, is considering the closure of the bulk of its European smelting capacity.

Olivier Baud, chairman of subsidiary Aluminium Pechiney, said: "The market price of energy makes it impossible to survive... We have to maintain low prices or we will have to close our plants one after another".

According to Mr Baud, Alcan's European operations, which produce a total of 1.2 Mt/y of aluminium, can survive on electricity prices of US$20-30/MWh, but at prices in excess of US$30/MWh the production of primary aluminium in Europe is uneconomic. Furthermore, in order for Alcan to justify the construction of new capacity, the company must be able to secure long-term prices of no more than U%20/MWh.

Mr Baud suggested that in the long term (15-20 years), European industrial electricity prices are likely to be in the order of US$40/MWh. According to Mr Baud, Alcan has significant problems with its French operations. The company's 250,000 tly Dunkerque plant is the biggest in Europe and has "the best technology in the world". However, its power contract expires in 2017. The contract for the 150,000 t/y Saint-Jean-de-Maurienne smelter expires in 2012. Mr Baud said that a possible means of securing sufficient low-cost electricity for the operations could be an investment in a new nuclear power plant using European pressurised water reactor technology. The company is discussing this possibility with utility Electricite de France.

This week, Mr Baud told France's Finance Minister, Herve Gaymard, that if new ways to maintain low industrial electricity prices are not developed, all of France's electricity intensive industries will disappear over the next ten years. Although the expiries of electricity contracts for the Dunkerque and SaintJean-de-Maurienne plants are some way off, Mr Baud said that Alcan is discussing with unions the future of its 43,000 t/y Lannemezan plant. This unit is under consideration as it is not competitive at current electricity prices. Possible options for the plant include modernisation or conversion to other uses. Mr Baud also said the future of the 150,000 t/y Vlissingen smelter is uncertain, as it is currently purchasing power on the spot market - a situation that will lead to its closure in the short term unless a solution is found. Power negotiations for the 43,000 t/y Steg plant in Switzerland are currently under way.




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