Energy prices in Europe: the aluminum sector shaken

According to Jean Simard, president of the Aluminum Association of Canada (AAC), it is not automatic that the drop in production of aluminum smelters in Europe, due to energy prices, will turn into an opportunity for companies he represents.

This is what he said in an interview with the show Public place Wednesday.

The AAC brings together the three Canadian primary aluminum producers, namely Alcoa, Aluminerie Alouette and Rio Tinto.

Jean Simard first quantified what aluminum producing companies in Europe must pay to obtain energy.

We are talking about natural gas, the main input, which is in fact going from 200 euros per megawatt hour to almost 800 euros, according to projections.advanced the president of the AAC.

The energy is used to transform alumina into aluminum by electrolysis, a very energy-intensive process.

We are talking about 500,000 tonnes that have been withdrawn. I remind you that Canada produces 3.2 million tonnes and Quebec 2.8 million tonnes. We calculate that there is probably another 700,000 tonnes that are at risk by the fall. So it’s the whole European industrial fabric that is affected by the surge in prices, but also, and I insist on this, by the onset of a recessionhe analyzed.

Jean Simard, President and CEO of the Aluminum Association of Canada.

Radio Canada

However, he mentioned that European politicians, such as the Prime Minister of Belgium, have called on people to tighten their belts in anticipation of future energy shortages, due to the war in Ukraine, not only for the winter to come, but also the next five to ten.

So we are seeing a very, very strong slowdown in demand, which means that even if there is less production capacity, if there is less demand, there will be no spillover effect elsewhere. in the worldhe continued.

He also mentioned that he does not expect a similar increase in energy costs here, specifically hydroelectricity in Quebec. It should also be noted that in the case of Rio Tinto, the company has hydraulic rights in Saguenay-Lac-Saint-Jean which allow it to produce part of its hydroelectricity itself.

Asked whether such conditions could lead to investments to increase production capacity, he remained cautious. However, he cited more minor projects such as the recent announcement on the billet plant in Alma, still valued at $240 millionor others to come in the field of recycling.

Jean Simard, however, recalled that construction costs are very high in Canada and that they can slow down investments. The possible recession also represents a dark cloud.

However, he concluded by mentioning that the price of aluminum was still very interesting. Even if it has dropped, we have gone from a very high peak of $4,000 per ton to $2,500-2,700, we are still in an interesting zone. […] The future is brighthe launched.

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