The Norwegian aluminium company, Norsk Hydro has stated by delivering a statement that there is a possibility to shut down its majority-owned aluminium smelter in Slovakia without the government in the nation coming out to support financially through the carbon compensation scheme.
The Slovalco aluminium smelter is 55.3% owned by Norsk Hydro and the remaining 44.7% is held by Penta Investments Group, with the capacity to produce 175,000 tonnes per year of aluminium already operating only at a 60% capacity of 105,000 tonnes.
Due to record high electricity prices, aluminium smelters in Europe have reduced production by 800,000 to 900,000 tons annually in recent months. As a result, the transport, packaging, and construction industries have experienced deficits and higher prices for consumers.
Halvor Molland, the spokesperson from Hydro said, “When Slovalco's power contract expires at the end of the year, keeping aluminium production going at Slovalco will become much more challenging.”
"Many countries, including Germany, Norway and Netherlands have chosen to support aluminium producers with carbon compensation. Slovakia hasn't. Slovalco supplies 50% of all aluminium consumed in Slovakia and employs 500 people.”
According to Norsk Hydro, the compensation for a smelter producing 200,000 tons of CO2 a year in countries like Germany is 67.55 million euros this year.
Under the Carbon Capture and Storage (CCS) scheme approved by the European Union, national governments can offer compensation to energy-intensive industries, such as aluminium smelting, to help offset some of the costs associated with the high carbon prices they are required to pay due to the Emissions Trading System (ETS).
The Environment Ministry of Slovakia in their response commented, “The new bill on (carbon) allowances trading is still in the legislative process. The Environment Ministry is aware of Slovalco's importance to the region, the ministry and the government have been helping the company. Slovalco received more than 21 million euros in 2016-2020 as compensation - 51.6% of the overall compensation paid."
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