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Aluminum

Slovenia's Talum cuts primary aluminium output to 20% of capacity

LONDON, Aug 25 (Reuters) - Slovenia’s Talum has cut production of primary aluminium to around 20% of its smelter capacity, a spokesperson said, joining other European firms forced to reduce output by sky-high energy costs.

Smelting aluminium is extremely energy intensive and power prices in Europe have increased up to tenfold since the start of 2021, making production at some sites unviable.

“We are reducing primary production and are currently at approximately 20% capacity,” the Talum spokesperson said in an email.

Talum can produce 84,000 tonnes of primary aluminium a year but had already reduced production by 50%, according to analysts at Macquarie.

The Talum spokesperson said the company was also feeding scrap aluminium into its melting furnaces and this meant the plant was producing around 110,000 tonnes of aluminium products a year.

They said aluminium was needed for green technology and the situation in which European production is forced to close is “absurd”.

Not counting Russia, Europe produced a little over 4 million tonnes of the 67 million tonnes of aluminium made worldwide last year, International Aluminium Institute (IAI) and Macquarie data show.

Around 1 million tonnes of European capacity has been taken offline since 2021 and another 500,000 tonnes is under threat, analysts at Citi say.

Norsk Hydro last week became the latest, saying it would stop all production at a 175,000 tonne a year smelter in Slovakia by the end of September.

Production cuts should mean larger deficits and higher prices for European consumers who use aluminium in the transport, packaging and construction industries.

But Europe is expected to tip into recession this year, reducing demand, and Chinese smelters have ramped up production, offsetting European losses.

Aluminium on the London Metal Exchange (LME) costs around $2,400 a tonne, down 40% from a peak in March.

Reporting by Peter Hobson; Editing by Kirsten Donovan

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