Energy prices forcing German aluminium manufacturers to cut production, lack of state aid may worsen the situation

The silvery metal aluminium has unblocked new dimensions in the last decades, as endless objects that can be simplified and upgrade the quality of daily human life are relatively made from aluminium.

Aluminium is essential in converting to a climate-friendly economy. Electric vehicles, renewable energies, building and construction, machines, electronics, and packaging materials can be from recycled aluminium.

Rob van Gils, the newly elected new President of Aluminum Germany, said, "The high energy prices are tearing the rug out from under the feet of energy-intensive production in Germany."

Primary aluminium production is highly energy-sensitive; around 17,000 kWh of electricity is required to produce 1 tonne of aluminium. This indicates that it has a relatively high cost. Germany's aluminium sector, with around 60,000 employees, is one of the most energy-intensive industries.

The main facility of Trimet in Essen needs as much electricity as the entire metropolis in the Ruhr area, with around 580,000 populations. Now, due to the sharp rise in electricity prices, Germany's largest aluminium manufacturer cut back its production significantly almost a year ago.

The facilities in Essen, Hamburg, and Voerde are currently only running at half their production capacity. However, the costs have risen to such an extent that it is no longer possible to cover the costs, let alone make a profit.

According to our sources, Trimet is not only an isolated case. The German production of raw aluminium descended by more than a fifth to almost 450,000 tonnes in H1 2022. Further decline is anticipated in H2 2022 as the situation worsens due to the expiry of contracts. Van Gils stated this would impact almost 40 per cent of German aluminium companies by the end of the year, and another 30 per cent will be in mid-2023 at the latest.

The North Rhine-Westphalian Economics Minister Mona Neubaur (Greens) described the aluminium industry as a vital industrial sector for Germany and an enabler of a climate-neutral society. It is necessary to limit energy prices as quickly as possible; in the medium term, it is about accelerating the expansion of renewable energies. "The next five years will be crucial for the industry's transformation to succeed,” says Neubaur.