Alro is contemplating various options to avoid reduction of production due to temporary shortage of electricity supply

Thu, 01/19/2012 - 10:28
  • Hidroelectrica currently supplies approximately 50% of Alro’s consumption
  • The Company bought significant quantities of electricity from spot markets, at high costs
  • Alro is taking all necessary measures to maintain the continuity of business

Slatina, 19 January 2012 – Alro SA (BSE: ALR) (“Alro”, “the Company”), the largest aluminium producer in Central and Eastern Europe, is contemplating various options to avoid reduction of production due to temporary shortage of electricity supply from Hidroelectrica.

“We are currently working on maintaining the continuity of business, despite the fluctuation of the electricity supply”, said Gheorghe Dobra, Alro CEO. “We are confident that we will be able to find a suitable solution regarding the electricity supply and that we will be able to implement our long term development strategy in Romania”.

However, if Alro is unable to contract the remaining necessary quantity of energy at economically viable price levels, the Company is exploring various options, including restructuring of operating process and temporarily idling the less efficient part of production capacities.

Due to the Force Majeure declared by Hidroelectrica, Alro now receives approximately 50% of the required electricity from the power producer. As a result, Alro has been forced to purchase a significant quantity of energy on the Day Ahead Market and from the Balancing Market. These markets were not created for contracting purposes, but for adjusting the deviations from daily forecasted consumption. These are short term, unpredictable contracts that typically incur high costs. Moreover, they give no consideration to the unique “base load” consumption profile of Alro and to the benefits that a large consumer brings to the National Power Grid.

All the electricity purchased by Alro, both through direct contracts, and on the OPCOM platform, has been and continues to be used solely for the production within Alro, Vimetco Extrusion and ALUM. Alro, Vimetco and any of their subsidiaries never resold or plan to resell electricity to third parties.

In 2011, Alro continued its investment programme to improve the quality and range of its products, with the aim of increasing the competiveness of its processing plant. The drastic fall in aluminium price 4Q 2011, combined with the unpredictable price of electricity determined by the current situation, impacted the financial results of the Company.

In order to ensure long-term viability of business, Vimetco continues implementing its efforts to become energy independent in Romania. At the end of 2011, Vimetco Power Romania finalized the first step of the bidding process for the general contractor for its own power plant in Tulcea. The project for the power cogeneration plant of 250 MW at Alum Tulcea will have the financial support of EBRD and commercial banks.


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Notes to the Editors:

Alro is subsidiary of Vimetco N.V., a global, vertically-integrated primary and processed aluminium producer. Alro is the largest aluminium producer in Central and Eastern Europe measured by volume with an installed production capacity of 265,000 tonnes per year.

The main markets for the aluminium manufactured by Alro are within the EU (Hungary, Poland, Greece, Germany and Romania). Alro also exports to the US and Asia. Alro is ISO 9001 certified for quality management and has NADCAP as well as EN 9100 certificates for aerospace production organizations. Alro’s products adhere to the quality standards for primary aluminium on the LME, as well as international standards for flat rolled products.

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