October 29, 2009 / 3:06 PM / 10 years ago

Europe metals producers warn of relocation

MADRID (Reuters) - European non-ferrous metals producers may move to countries where environmental legislation is less strict unless the impact of forthcoming measures is reduced, an industry spokesman said on Thursday.

Javier Targhetta, president of Eurometaux, said the industry was concerned over high and unpredictable power costs, the added cost of a new emissions trading scheme (ETS) in 2013 and a new registry of chemicals, amongst other issues.

Industry group Eurometaux estimates non-ferrous metals makers directly and indirectly employ one million people in Europe, and contribute 2 percent of its economic output.

“Without satisfactory solutions in these areas, the European industry’s competitiveness will be seriously affected by the market and regulatory advantages of emerging countries,” Targhetta told journalists.

Electricity accounts for an average of 35 percent of production costs for non-ferrous metals — 60 percent for aluminum — and producers say big differences in policy between European countries and lack of interconnection make power more expensive.

Targhetta was particularly concerned over what he said was the reluctance of utilities to sell power for terms of three years or more following deregulation for heavy users in Spain last year.

“This increases long-term insecurity and leads to a halt in investment. If we carry on like this, the industry is destined to disappear,” he said.

ETS COSTS

Eurometaux estimates a new phase of the ETS could hike its power costs by an unsustainable 150-200 million euros ($221.1-294.8 million), and may prompt “carbon leakage,” or relocation to countries where emission costs are low or nil.

“Carbon will still be produced, it will still be producing the greenhouse effect, but a European plant will have been lost,” Targhetta said.

Under the current ETS scheme, national governments give heavy industry a quota of free permits, many of which have been resold at a profit. But many firms will have to buy permits at auction from 2013.

Also of concern were the potential costs of an EU law called Registration, Evaluation and Authorisation of Chemicals (REACh), which is designed to protect the public and the environment from potentially harmful materials found in manufactured goods.

Targhetta, who is also president of Atlantic Copper, part of Freeport McMoRan Copper & Gold Inc., estimated that gathering information for REACh had cost the copper industry alone 8 million euros.

“Measures like this are being pioneered in the European Union, which entails a special challenge,” he said.

Reporting by Martin Roberts. Editing by David Brough

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