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Europe has lost another aluminum plant due to the energy crisis

12 March 2023

Another aluminum factory in Europe is closing its doors, a new proof of the damage caused by an energy crisis that has hit the European industrial sector and reduced the supply of vital raw materials, Bloomberg reports.

Even though electricity prices have fallen significantly from last year’s record highs, Speira Gmbh announced that it has decided to close its aluminum plant in Rheinwork (Germany) this year due to challenges on the energy market. The closure of the facility follows a halving of production announced in September last year, when the explosion in electricity and gas prices brought Europe’s metals industry, a major energy-guzzling sector, to the brink of an existential crisis.

While some aluminum plants have managed to restart production in recent weeks, the closure announced by Speira is also a sign of the obstacles facing politicians trying to avoid a new wave of deindustrialisation. In parallel, the political factor tries to strengthen the local supply of vital industrial raw materials, in the context in which the global supply chains are becoming more fragile.

According to a European Commission document consulted by Bloomberg, which would be presented at the end of this month, the Community Executive wants to produce at least 40% of the annual consumption of strategic raw materials in 2030. The document does not specify which raw materials are targeted, but in 2020 the EU identified 30 raw materials of strategic importance, many of them playing an essential role in renewable energies, the production of electric vehicles, the aerospace and defense industries. That list includes bauxite, an ore from which aluminum is produced, but not aluminum, according to Agerpres.

For several decades, the world aluminum market has been affected by the problem of production overcapacity, but the events of recent years, including the trade war between the US and China, the invasion of Ukraine and the energy crisis in Europe, have brought to light the fragility of global supply chains. This creates a danger given the West’s dependence on aluminum supplies from large producers such as China and Russia.

Aluminum is one of the metals whose production requires high energy consumption and European aluminum production capacities have been reduced by more than half since the onset of the energy crisis. Many aluminum plants have reduced production while others, such as the plant that the Norwegian group Norsk Hydro ASA has in Slovakia and that of the Alcoa group from San Ciprian (Spain), have completely stopped production.

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