Hydro challenges EU politicians to act for industrial competitiveness

If Europe wants to reach its sustainability targets, it must retain a competitive aluminium industry by cutting the costs that its policies impose on European smelters. At a conference organized in Brussels by the European Aluminium Association, Hydro’s Oliver Bell called for immediate actions to avoid the loss of entire industrial value chains.

November 29, 2013

Since 2007 European primary aluminium production capacity has declined by over a third. Eleven smelters have already closed or curtailed their production. A recent study concluded that this situation is mainly due to the increasing costs imposed by European Union (EU) policies. On 27 November, the European Aluminium Association (EAA) organized a conference in Brussels to discuss with politicians how to reverse this "deindustrialization" trend.

Among the panelists, Hydro's Executive Vice-President, Oliver Bell, insisted in particular on the increasing costs of electricity. Energy is the main competitiveness factor for primary aluminium production and its costs are very high in Europe.

"Our industry is at a turning point. We don't need further analysis. The EU must act now to reduce the extra costs imposed by its climate and energy policies on the price of electricity and to make energy-intensive industries competitive again on the global market," Bell said.

EU officials acknowledged that the difference in energy costs between Europe and the rest of the world is increasing, and that because of the global pricing system for aluminium, those increased costs reduced and even eliminated profits for European companies.

"This competitiveness gap must be decisively addressed, and this is why today we are bringing a constructive Agenda for Action to the attention of the EU Commission," Roeland Baan, EAA chairman (Aleris), announced at the conference.

The association is proposing a series of measures, such as facilitating the conclusion of long-term contracts in the electricity market and accepting exemptions from extra costs related to climate and energy policies. The EAA and its member companies, including Hydro, will now seek support for these proposals at both European and national level.

A competitive industry for a sustainable society

Maintaining a competitive primary aluminium production in Europe is essential for industry and for society, Bell – who is also vice chairman of the EAA – explained. "It is the starting point of several industrial value chains and innovation comes from close collaboration between all actors of a value chain. Europe cannot afford to lose primary aluminium production if it wants to remain a global leader in innovation."

He also warned that competition from third countries is growing fast in the downstream sector.

"Losing primary production is the first step towards losing semi-fabrication, and eventually the whole value chain is gone," he said. Europe would also need to import more aluminium, as demand for the metal is still growing. Import levels into EU already exceed 50 percent.

Gwenole Cozigou, director in the European Commission's Industry department, echoed Hydro's concerns and agreed that Europe would lose an industry that is not only innovative but also a leader on safety, low carbon emissions, energy efficiency and recycling. The latest statistics compiled by the EAA and presented at the conference confirm the continuous improvements in the sustainability performance of the sector as well as the increasing benefits of using aluminium in products and of recycling.

Michael Kuhndt, director of research institute on Sustainable Consumption and Production working for the United Nations, supported the key role aluminium can play in a more resource-efficient society, through lighter vehicles, more energy-efficient buildings, better protected food and many other applications.

All panelists also hailed the recycling potential of aluminium – "the energy bank". "Knowing how dependent on other countries Europe is for its energy supply, it is striking to see how much valuable aluminium scrap is exported every year," Edit Herczog, member of the European Parliament, said.

Scrap leakage from Europe is increasing by 22 percent each year.

Updated: October 11, 2016