The agreement with the Slovak government marks an important milestone to resume full operations at Slovalco after operations were curtailed in 2022 due to high power prices. It establishes the long-term framework conditions necessary for aluminium production, including a robust compensation scheme for indirect carbon costs under the EU Emissions Trading System (ETS). In addition, Slovalco has entered a long-term commercial power purchase agreement (PPA) with Vodohospodárska výstavba, š.p.
The decision to restart Slovalco is dependent on approval of the updated Slovak scheme for compensation of indirect carbon costs (ICC) by the European Commission.
Slovalco will invest EUR 100 million to restart production, which will support more than 200 jobs in the region. Aluminium production is expected to start during fourth quarter of 2026.
The agreements enable the restart of the first 75,000 tonnes of a total 175,000 tonnes annual aluminium production capacity at the Slovalco plant. A restart of the remaining 100,000 tonnes will depend on the framework conditions beyond 2030 combined with additional power contracts.
Restart strengthens European supply and industrial resilience
“Aluminium is essential for the European economy and critical for everything from power grids and renewable energy to transport, defense, and infrastructure. The agreement on Slovalco is important both for Slovakia and for Europe as a whole,” says Eivind Kallevik, President and CEO of Hydro.
EU based aluminium production capacity has been under significant pressure from high energy costs and increasing global competition. 50 percent of EU’s aluminium production has been curtailed since 2022.
“Slovalco is a highly energy efficient aluminium plant and, with a production capacity of 175,000 tonnes per year, Slovalco has the potential to restore a meaningful share of EU’s domestic primary aluminium production. Restarting the smelter will strengthen Europe’s industrial resilience, reduce dependence on imports and supply European customers with aluminium carrying significantly lower carbon emissions than the global average,” says Kallevik.
Framework conditions for European competitiveness
Predictable and competitive framework conditions are essential for European aluminium production to stay competitive, particularly long-term access to affordable electricity and ETS based compensation for indirect carbon cost that global competitors are not exposed to.
“European authorities must ensure balanced policy frameworks where instruments such as the Carbon Border Adjustment Mechanism (CBAM) and ETS Indirect Carbon Cost Compensation can prevent carbon leakage and maintain low‑carbon industry in Europe,” says Kallevik.
Hydro owns 55.3 percent of the aluminium plant Slovalco and 44.7 percent is owned by Penta Investments Group. The decision to curtail the primary aluminium production at the plant was made in August 2022.
Published: July 1, 2026
