Hydro goes recycling-only in Slovakia

Hydro, which owns a majority stake in Slovalco, a primary aluminum smelter in Žiar nad Hronom, Slovakia, says it will terminate production at the site in response to adverse framework conditions and high electricity prices. However, the casthouse in Slovalco will continue its recycling operation, serving customers in the region with 75,000 metric tons of recycled aluminum annually. Producing new aluminum from recycled material requires 95 percent less energy than primary aluminum production.

Slovalco is owned 55.3 percent by Hydro and 44.7 percent by Penta Investments Group.

“Slovalco is a well-run and modern primary aluminum plant, well-placed to serve European customers with high quality aluminum products,” says Ola Sæter, head of Hydro’s primary production and chair of Slovalco’s board of directors. “I regret that it has not been possible to secure continued operation of the primary production at the plant.”

He adds that Slovakia has not implemented the competitive EU CO2 compensation framework, preventing Slovalco from entering long-term power contracts. The plant’s current contract expires at the end of this year. “Due to the current Slovak framework conditions and the European power prices, Slovalco would incur substantial financial losses if it continued its operation beyond 2022,” Sæter adds.

Slovalco curtailed 40 percent, or 65,000 metric tons, of its annual primary production capacity in late 2021 and early 2022 and continues to run at 60 percent of its capacity. The primary production lines at Slovalco will be mothballed and could resume operations at a later stage if the market and framework conditions allow, according to the company. The closure process will begin shortly and be completed no later than the end of September.

Correspondingly, Slovalco has decided to unwind remaining hedge positions for power, metal and raw materials, Hydro says. This will result in a total positive effect on adjusted earnings before interest, taxes depreciation and amortization, or EBITDA, of around 1.6 billion Norwegian kroner ($164.7 million) in the second half of 2022, the company adds.

The decision to close primary production will affect 300 of Slovalco’s full-time employees.