GFG Alliance striving to find solution for San Ciprián aluminium smelter, expecting guaranteed sources of power and alumina

GFG Alliance is committed to aid Alcoa’s troubled San Ciprián aluminium smelter in northwest Spain and is confident to find a solution for the smelter’s long-term sustainability if sources of power and alumina are guaranteed, said Jay Hambro, GFG’s Chief Investment Officer.

In early August, GFG Alliance had hinted its interest in acquiring Alcoa’s 228,000 tonnes per year capacity smelter, as per some Industry sources.

Hambro said in an interview on September 14, “This single site is Spain's single largest power consumer, energy costs are of vital importance to its success or failure and with a very sizeable investment in renewable energy in that part of Spain and broadly across Spain, we can create a cost-base for the smelter that will support a long-term future."

He added, “GFG is trying very hard to create a long-term sustainable solution for the San Ciprian smelter.....we're very good at finding ways using a bit of imagination and the phenomenal human resources that we have in-house and our good track record of working with all stakeholders to bring those ingredients together to change the future of industries that a lot of people write off..... We're working with Alcoa to make sure the investments we make - that would have a pay-back period of 10 plus years - would be supported by us having confidence in the supply of their (alumina) refinery. If we can solve all these elements and have the willing cooperation of the vendor I'm pretty sure we can deliver what we do best.....changing the fortunes of a business like this."

However, on the other hand, according to Alcoa’s Spanish office, the negotiations between GFG Alliance and Alcoa are still far apart.

"Twelve days since the agreed date for an agreement on the general conditions for the sale of the aluminum plant at San Ciprian, GFG is still putting forward unreasonable demands which are outside of the negotiated agreement and is risking the sale process," said Alcoa said on September 11 in a statement sent to Platts.

Alcoa explained that GFG is insisting on a 90 day inventory, which is not possible to store at the plant. Besides, the company is demanding rights over the alumina refinery, which is neither for sale nor is part of the agreement signed on August 13 with worker representatives.

However, Hambro did not comment on the differing stances in negotiations except stating that guaranteeing on raw material supply from the San Ciprián alumina refinery – which has not been included yet in the current sales negotiations – would be essential for the smelter purchase to go ahead.

Liberty House Group, part of GFG Alliance, expanded its aluminium interests over the last two years. Its aluminium assets include Europe’s biggest (280,000 tonnes per year) aluminium smelter in Dunkrik, acquired from Rio Tinto, the United Kingdom’s sole smelter at Fort William, Scotland, and downstream assets consolidated into the Alvance Aluminium Group.

Alcoa, for over many years, has had tussles with the Spanish Government on energy prices, which are considered a contributory factor to the San Ciprián’s loss-making performance and also the most crucial reason for the company’s decision to sell its other two Spanish smelters, the 93,000 tonnes per year site at Aviles and the 87,000 tonnes per year plant at La Coruna to Swiss Group Parter Capital.

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