July 21 (SeeNews) - Romanian aluminium producer Alro [BSE: ALR] said that it would temporarily shut down its alumina plant Alum based in Tulcea due to 'prohibitive' energy prices.
The management proposed for the approval of the general meeting of shareholders, which will take place on July 29, 2022, the temporary suspension of ALUM’s alumina production operations, starting with August 1, 2022 for an estimated period of 17 months, the company said in a filing to the Bucharest Stock Exchange on Wednesday.
“The economic crisis generated by the pandemic has been escalated by the energy crisis from 2021 as a result of the accelerated increase of the electricity and natural gas prices with a negative impact on the production costs for calcined alumina and electrolytic aluminium. The natural gas cost per one tonne of alumina is significantly higher than the actual price of one tonne of alumina imported and delivered to Alro," Gheorghe Dobra, CEO of Alto and chairman of the board of directors of Alum, said in the press release.
The aim of these measures, which are fully compatible with the technology used in Alum’s alumina refinery, is to preserve the group assets and to keep the financial stability of the group at a sound level, in order to be ready to face the challenges ahead in the current particularly difficult economic environment, the company explained.
The natural gas price increased tenfold - from 18 euro per MWh in the first quarter of 2021 to over 180 euro per MWh in the last quarter of 2022.
The electricity price exceeded quotations of 500 euro per MWh for Q4 2022, from 60 euro per MWh in the first quarter of last year.
The price of the CO2 emission certificates has increased from 25 euro per certificate at the end of 2020 up to over 90 euro per certificate currently.
The alumina produced by Alum, would reach a cost of more than $900 per tonne, while the price of alumina on the international markets is around $500 per tonne. The weight of energy products in the total cost of alumina is notably high, reaching $500 per tonne in 2022, he added.
Alro has reduced the primary aluminium production by 60% by shutting down three electrolysis potrooms and Alum has revised its manufacturing schedule according to the level of calcined alumina required for Alro but with the continuous increases in prices, the cost of alumina has reached an unsustainable level, according to the press release.
Some 500 employees are to be laid off at the Tulcea plant, while the plant will keep a key group of specialists to perform R&D, alumina supply logistics, maintenance, and repair works and to be ready for a quick restart and ramp up of the production when the energy market conditions will improve.
Alum is the only calcinated refinery located in Romania.
Alro's shares traded 1.83% lower at 1.34 lei ($0.28/0.27 euro) on Thursday afternoon on the BVB.
(1 euro= 4.939 lei)