soaring-electricity-hits-french-metallurgy

Soaring electricity hits French metallurgy

Posted on 22 Dec. 2021 at 18: 19

The energy crisis turns into a puzzle for European metal producers. Due to the surge in electricity and gas prices to record levels, several manufacturers have been forced to reduce or even cease production.

For the past two weeks Aluminum Dunkirk, the largest European aluminum smelter, for example reduced its production. A trade unionist explains to Bloomberg that the French factory has lost around 20 millions of euros since the beginning of November.

The manufacture of this metal is energy intensive. It is no coincidence that manufacturers sometimes have fun saying that aluminum is nothing other than solid electricity . It takes approximately 000 MWh of electricity to produce a tonne of metal in Europe according to the International Aluminum Institute.

170 euros per MWh

However, electricity prices are soaring to unbearable levels for manufacturers. In France, for example, the reference price for electricity on the wholesale markets, for delivery in twelve months, exceeded 350 euros per MWh at the start of the week, a new historical record.

Nyrstar l one of the major zinc producers is encountering the same difficulties. On Friday, the group warned that the Auby plant in the North, the last zinc production site in France, will be shut down in early January for at least 2 months.

The factory had certainly subscribed to 2011 to the ARENH mechanism allowing electro-intensive industries to buy historic nuclear electricity from EDF at 42 euros per MWh, but this contract currently only covers 56% of the site’s consumption

The rest of the electricity must be purchased on the “spot” market, at cash, where prices have exceeded 400 euros per MWh, warned Ludovic Bouvier, representative of CGT Métallurgie in Hauts-de- France.

Metals on the rise

Under these conditions, production is not profitable . “There is no bluff. we are facing a wall ”, deplored the director of the factory Xavier Constant, referring to“ unimaginable prices ”. To produce 170.000 tons of zinc the factory consumes annually 56 GW of electricity, or the equivalent of “Lille and its suburbs.”

At the London Metal Exchange, prices started to rise again in early December due to gloomy production prospects. A tonne of aluminum trades at more than 2. 800 dollars, up from 43 % since the beginning of the year. Zinc increased from 28% to 3. 400 dollars per ton.