The big industry begins to stop before the “catastrophic” rise in the price of electricity

The activity of the large Asturian industry is “at serious risk” due to the escalation in electricity prices, which has worsened with the invasion of Ukraine. The association of companies with large energy consumption, AEGE, to which companies with strong weight in the region such as ArcelorMittal or Asturiana de Zinc belong, yesterday described the situation in Spain as “catastrophic”. Several steel and metallurgical plants have already stopped production and AEGE predicts a cascade of activity shutdowns with uncontrollable results if high prices continue without the Government taking action. Yesterday, ArcelorMittal stopped production at the Olaberria plant in Gipuzkoa due to energy prices and does not rule out adopting the same measure in the factories in Asturias – on which 5,000 direct jobs depend – if the electricity continues to run wild.

Fernando Soto, general director of AEGE, highlighted that with prices “never seen” that were registered yesterday, with peaks of up to 700 euros per megawatt hour and an average of 544 euros, the activity of the Spanish electro-intensive industry, with a strong weight in Asturias, “is at serious risk given its high exposure to the daily market price (more than 90% of consumption) and the fact that it does not have most of the regulatory measures that its European competitors have to deal with this catastrophic situation.”

Soto pointed out that yesterday morning he contacted AEGE’s main associates and that in the case of the steel and non-ferrous metallurgical industry (alloys, zinc and aluminium), many of its plants were going to stop production or reduce it in certain Schedule. Asturiana de Zinc has been lowering the power of its electricity consumption during peak hours for months to contain spending and in recent days the company has assured that it is producing “at a loss”. At ArcelorMittal “it is not ruled out” that shutdowns be made at plants in Asturias if current energy prices are maintained, according to sources at the multinational. For the time being, the steel company yesterday stopped production at the Olaberria profiles plant in Guipúzcoa. At 7:00 in the morning, it stopped producing and, in principle, it was going to be stopped until 0:00 at midnight, pending the evolution of prices. Other steel companies, such as Galicia’s Megasa, also stopped plants due to energy costs.

The Spanish electro-intensive industry highlights that with current electricity prices and those set by futures markets, they will pay some 3,000 million euros more in 2022 than their French and German competitors. “This situation leaves us very limited to develop our activity and to be able to invest in updating our plants and adapting them to decarbonization,” said Fernando Soto.

To cushion this situation exacerbated by the war in Ukraine, the electro-intensive industry sector asks the Government to adopt “urgent measures similar to those of other European countries such as France, Germany, Italy and Portugal”, which go beyond the reduction of 80% in the tolls in the electricity bill announced by Pedro Sánchez. AEGE points out that in the absence of bids from electricity companies for bilateral contracts at prices prior to those of the energy crisis, the Government should call energy auctions for inframarginal technology (nuclear, hydraulic and renewable) and offer renewable energy, cogeneration and waste to a regulated price; maximize indirect CO2 compensation, up to 450 million euros by 2022, and launch a new service to replace interruptibility, as they have done in Portugal.

Guillermo Ulacia, president of the Asturian employers association Femetal, pointed out that electro-intensive companies are the most affected by the rise, but “in the case of companies from the rest of the metal industry, which has less impact on their manufacturing costs, and that have annual contracts, they are finding themselves with the dilemma of whether the marketers, both gas and electricity, are going to be able to maintain the conditions of the fixed contracts, at a time when the companies were trying to recover profit margins and there are many doubts that they can be achieved”.