According to a labour union spokesman, Aluminium Dunkerque Industries France has reduced metal output in the last two weeks due to a rise in power rates.
According to union official Laurent Geeraert, the reductions correspond to around 3% of Aluminium Dunkerque's manufacturing capacity. Since the beginning of November, the plant has lost nearly 20 million euros ($22.6 million), and more curtailments may be necessary if electricity prices continue high, he added. The cuts were verified by a second source familiar with the activities.
While aluminium prices have increased by more than 40% this year, and demand for the plant's goods is increasing, profitability has been undercut by a significantly higher increase in electricity rates in recent weeks. The electricity needed to create one tonne of aluminium, which was selling at around $2,800 a tonne on the London Metal Exchange on Wednesday, would cost roughly $11,000 at one-month baseload pricing in France.
Further reductions in output will be contingent on the plant's ability to meet its contractual obligations to customers, according to Geeraert. Aluminium smelters are notoriously sluggish to reduce output due to the significant expenses of shutting down and restarting capacity.
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Aluminium Dunkerque is Europe's largest primary aluminium smelter and a valuable industrial asset that is vital to the French government. In October, the smelter was taken over by private equity company American Industrial Partners, who foreclosed on debts held by Liberty Industries France, a unit of Sanjeev Gupta's troubled GFG Alliance.
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