Some of Europe's leading metals producers have called on politicians in recent days to put together a package of measures, including state aid and the release of national gas reserves, to ease the power crisis and avert further smelter shutdowns.
Eurometaux, which represents producers including Glencore Plc, Rio Tinto Group and Norsk Hydro ASA, wrote to the European Commission It warned that without additional support to protect smelters from soaring power costs, more producers could be forced to cut production or close plants altogether.
Aluminium and zinc producers have been hit particularly hard by soaring gas and electricity prices, with smelter production cuts and closures in the past few months triggering regional supply shortages and leading to a sharp rise in metals prices. The energy crisis has cut about 650,000 metric tons of aluminum capacity, or about 30 percent of the region's total capacity, the association said in its letter.
Although electricity prices have fallen from their peak last month, smelters in some countries, such as France, still pay more for their products than market prices and remain unprofitable in the spot market. Meanwhile, Gas stocks in Europe are well below normal levels for this time of year, with a shortage of Russian supplies raising the risk of further price spikes through the winter.
In its letter, the European Metals Association suggested reducing costs by using national gas reserves to stabilise the market and by taking steps to ensure the carbon price does not rise too high or too fast.
The association also called on the European Commission to quickly develop a country assistance framework to provide further short-term support, similar to the temporary measures introduced during the COVID-19 pandemic.
"If the EU and member states do not take stronger action, there is a real risk that our industry will face further job cuts and closures, undermining Europe's strategic autonomous objectives." "The association said in the letter. "Much more needs to be done now to stem the effects of the current crisis and to avoid a repeat of this situation in the years ahead."
