Could Anglesey Aluminium Avoid Permanent Shutdown?

by Helen Wilkinson

The aluminium smelter at Holyhead is on the verge of returning to full production following a five month interruption caused by a fire in a transformer on 12 June this year.

As a result of this incident there was a partial shutdown at the Rio Tinto - Kaiser jointly owned plant, which employs around 500 people in the Holyhead area.

Originally the local management had estimated the repairs work, which is quite hazardous to carry out, would have taken a month longer than has actually been the case.

Against the background of this excellent news, according to David Bloor, Managing Director at Anglesey Aluminium, they are now proactively trying to secure a new electricity supply contract.

The current supply contract with Wylfa Nuclear Power Station at Cemaes ends in September 2009, and the nuclear plant itself closes at the end of 2010.

During a recent announcement of company results, a Kaiser Aluminium Corporation spokesman suggested that a complete and final shutdown of the Holyhead smelter is still an option.

Power is an important consideration for the plant as it makes up a significant part of the input cost in the smelting process. In fact, Anglesey Aluminium uses around 13% of the total electricity consumed in Wales.

As to the prospects for keeping the plant open it will depend on securing a viable, cost effective electricity supply as well as the outlook for the world economy.

With a global economic slowdown spreading, we now see European economies entering a recession. And as Anglesey Aluminium supplies mainly European markets, it is likely that in the first instance inventories will be run down.

The Chinese economy which has been the cause of the big rally in commodity prices has recently slowed down, so much so that the government announced a $600 billion economic stimulus package.

If other countries do likewise and try to stimulate growth in their economies, perhapsthe coming downturn will be not as deep as feared.

This way demand in the European economies may recover sooner rather than later and so Anglesey Aluminium's markets may once again start to grow.

So the chances of avoiding permanent shutdown at the Holyhead plant depend both on the outlook for aluminium demand in Europe as well as securing a reliable electricity supply soon.

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