Norsk Hydro: Slovalco will stop primary aluminium production
Hydro’s Slovalco aluminium facility in Slovakia will cease primary aluminium production by September 2022 due to adverse market conditions and high electricity costs. While the casthouse will continue recycling 75,000 tonnes of aluminium annually, the closure affects 300 employees and will result in a positive EBITDA impact of NOK 1.6 billion in H2 2022. The plant previously curtailed 40% of its capacity and will mothball primary production lines, which may resume in the future if conditions improve.
- Positive EBITDA impact of NOK 1.6 billion in H2 2022 from unwinding hedge positions.
- Continued recycling operations at the casthouse, maintaining regional aluminium supply.
- Closure of primary aluminium production affects 300 full-time employees.
- Slovalco unable to secure long-term power contracts due to non-competitive Slovak CO2 compensation framework.
- Significant reduction in primary production capacity, further curtailing operations.
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Hydro’s majority owned Slovalco aluminium facility in Slovakia has decided to close the primary aluminium production at the plant. The closure will be completed by the end of September 2022.
The decision to terminate primary aluminium production at Slovalco comes in response to adverse framework conditions and high electricity prices, which show no signs of improvement in the short term. The casthouse in Slovalco will continue its recycling operation, serving customers in the region with 75,000 tonnes of recycled aluminium annually.
“Slovalco is a well run and modern primary aluminium plant, well placed to serve European customers with high quality aluminium products. I regret that it has not been possible to secure continued operation of the primary production at the plant,” says Ola Sæter, head of Hydro’s primary production and chair of Slovalco’s Board of Directors.
“Slovakia has not implemented competitive EU CO2 compensation framework. This has prevented Slovalco from entering long term power contracts and the plant’s current contract expires at the end of 2022. Due to the current Slovak framework conditions and the European power prices, Slovalco would incur substantial financial losses if it continued its operation beyond 2022,” says Sæter.
Slovalco curtailed 40 percent of its 175,000 tonnes per year primary capacity in late 2021 and early 2022, and is currently running at 60 percent of its capacity. The primary production lines at Slovalco will be mothballed and may resume operations at a later stage if the market and framework conditions allow. The closure process will commence shortly and be completed no later than the end of September 2022.
Correspondingly, Slovalco has decided to unwind remaining hedge positions for power, metal and raw materials. This will result in a total positive effect on adjusted EBITDA of around NOK 1.6 billion (100 percent) in the second half of 2022. The total cost of the production termination is limited
The decision to close primary production will affect 300 of Slovalco’s full time employees, in addition to a reduced need for services from contractors and suppliers in the region. A process has started to assist affected employees.
Slovalco is a fully consolidated aluminium smelter in Hydro, owned 55.3 percent by Hydro and 44.7 percent by Penta Investments Group. Slovalco has an annual production capacity of 175,000 tonnes of primary aluminium and a casthouse capacity of approximately 250,000 tonnes.
Investor contact:
Line Haugetraa
+47 41406376
Line.Haugetraa@hydro.com
Media contact:
Halvor Molland
+47 92979797
Halvor.Molland@hydro.com
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