Aluminum company Speira closes down German plant

03/16/2023 / By Belle Carter

Global aluminum company Speira announced that it will close down its Rheinwerk plant in Germany.

According to a Bloomberg report, the closure followed a 50 percent cut in production announced by the company in September 2022. The media outlet added that this serves as “a fresh sign of the damage wrought by an energy crisis that’s hammered the region’s industrial economy and crimped supplies of critical raw materials.”

A company spokesman said the facility will be placed in long-term care and maintenance, adding that it could eventually reopen if the situation improves. The closure of the Rheinwerk plant will affect around 300 employees.

The spokesman added that Speira will now focus solely on recycling and processing aluminum into value-added products. All contracted sales to customers will also be delivered, with externally sourced raw materials offsetting the curtailed production.

Aluminum is one of the most energy-intensive metals to produce. Critics say restarting a smelter is slow and costly, and aluminum smelters that stopped operations due to earlier downturns have never reopened.

“History has proven [that] once aluminum smelters go away, they don’t come back,” said Mark Hansen, chief executive of Concord Resources Ltd., a metals trading house.

Other reports pointed to the Speira shutdown as the latest sign of the obstacles politicians in the European Union (EU) face as they seek to prevent a further wave of deindustrialization. The EU is also looking to shore up local supplies of these industrial raw materials as global supply chains are starting to dwindle.

Citing legislation due to be presented to politicians in Brussels, Bloomberg‘s Mark Burton reported that the European Commission “will aim to produce at least 40 percent of its annual consumption of strategic raw materials by 2030.” While the legislation did not include details on the strategic commodities, the EU identified 30 key raw materials in 2020. Many of these play a critical role in renewable energy, electric vehicles, aerospace and defense – including aluminum.

EU aluminum supply still under pressure despite falling energy costs

An article published on the website of Dutch multinational banking and financial services ING noted that falling energy costs in Europe have eased fears of a deep recession. However, the impending closure of Speira’s Rheinwork plant showed that EU aluminum smelters are still under pressure.

“We still believe, given the uncertainty over the gas market in 2023, smelters will be reluctant to bring back production too quickly,” Warren Patterson and Ewa Manthey wrote.

They further cited Norsk Hydro, a Norwegian aluminum and renewable energy company, warning that the market will continue to be challenging for aluminum smelters despite a recent drop in power prices. Its smelting facility in Slovakia is said to have shut down in September.

At that same time, European aluminum production has already dropped to the lowest levels since the 1970s as the power-intensive industry grapples with skyrocketing energy costs.

“The primary aluminum industry in Europe has already paid a large tribute to this energy crisis. If we reduce further, we will be in a position where the primary industry will have completely disappeared in Europe. In terms of sovereignty, it would be bad for Europe,” said former Aluminium Dunkerque Industries France CEO Guillaume de Goys. The said smelter completed its closedown on October 1. (Related: The SHUTDOWNS continue in 2022: Aluminum, copper, iron, steel production being shuttered at alarming rate.)

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